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Tax Topic #652 2008 Tax Year

Topic 652 - Notice of Underreported Income � CP-2000

The IRS compares information returns filed on forms W–2, 1098, 1099, etc., with income and deductions reported on prior year income tax returns. If you forgot to report any income, payments, or credits or overstated certain deductions on a prior year return, you may receive the Underreporter Notice CP-2000. The notice number CP-2000 appears on page 1 in the upper right-hand corner. It also shows a phone number that you can call if you need assistance after you have responded and are not satisfied with the outcome.

The notice informs you of the proposed changes to income, payments, credits, or deductions; and the amount due to IRS, or refund due to you. It is normally a five to six page letter. The size of the notice varies according to the number of issues identified in your notice.

The first page of the CP-2000 is called the "Summary Page". It provides a brief summary of the notice and instructions on what you should do to determine if you agree or disagree with the proposed changes.

You will see the changes proposed by the IRS, the amounts you reported on your original return and the amounts reported to IRS. The notice will also show the increase or decrease in income. You will also see the name of the payer, their ID number, and the kind of document that was issued, (i.e.; W–2, 1099) and the Social Security number of the person the document was issued to. The tax liability is computed based on the income changes. It can propose additional tax you owe IRS, or it may show a refund due to you. Be sure that you review this information carefully to verify its accuracy.

A response page is also included to indicate whether you agree, or disagree with the proposed changes. It also has an area for you to authorize someone other than yourself to discuss and give information to the IRS pertaining to the proposed changes. This page should be attached to your response.

If you agree with the tax changes, sign the response and return it in the enclosed envelope. The balance on the notice may not include all interest due. You may pay the amount you owe within 30 days from the date of notice or you may send the signed consent without payment. We will bill you for the amount due plus additional interest. You may request a payment arrangement to pay the amount you owe IRS. If you wish to pay in installments, please complete and return the installment request form enclosed in the notice and return it with your response page. You will be contacted later with payment information. If an installment agreement is approved, you will be charged a one time fee.

If you DO NOT agree with part or any of the notice, DO NOT SIGN THE NOTICE. Instead, check Option 2 or 3, on the response page, explain why you do not agree in a signed statement, attach the statement and supporting documentation for consideration, to the response page, and send it to us. Include your phone number with area code and the best time of day to call.

Do not file an amended return, Form 1040X (PDF), if you do not agree. These are only proposed changes and the tax liability is not yet assessed. If a Form 1040X is appropriate, return it with your response page.

You must respond within 30 days of the date of the notice or 60 days if you live outside the United States. An envelope will be enclosed for your convenience. If you have lost the envelope, please send your response to the address listed in the upper left hand corner on page 1. Send your responses (including Form 1040X) to the address on the notice and attach a copy of the notice (CP-2000, CP-2501, or a statutory notice of deficiency).

If we do not hear from you within the 30 or 60 day period, a statutory notice of deficiency will be issued and additional interest will be charged.

Page Last Reviewed or Updated: December 22, 2008

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