IRS CP2000 Notice of Under reported Income – San Diego Tax Attorney

IRS CP2000 Notice – what should I do if I receive one?

The IRS CP2000 notice means that the income and/or payment information the IRS has on file for you does not match the information you reported in your tax return.  It is just a proposed adjustment for either an underpayment or over payment and hopefully an over payment.  It is not a bill….yet.

Most of the time though, a taxpayer gets into trouble by not reporting enough income or possibly their employer or 1099 work reported the income wrong.  The best thing you can do when you receive this notice is to act on it if you have mistaken under reported income.  If you do not, the proposed amount will be assessed and the IRS will quickly move into collection activity.

What if the information I reported is incorrect? 

You can call in to the IRS to correct the tax return in question.  However, to correct it this way, the mistaken reported information must not increase or decrease your tax.

What if I disagree or the information reported is wrong on the IRS CP2000 notice?

Follow the information on the IRS form if the information is wrong. You may also contact the person or business reporting the income information and ask them to correct it and provide the IRS with the updated information.

If you cannot get a business or person to change the reporting information or if someone is using your name and social security number, call the IRS and let them know the situation.  The next step is to document and make a copy of all your attempts to rectify the situation, attach this and file with IRS Form 14039 Identity Theft Affidavit.

Additionally, if the IRS processed the reported information incorrectly, be sure to either write back to them according to the notice or call the IRS directly.  It is important to file a timely, detailed and organized response by the due date in the notice.  If your response is incomplete and confusing, the IRS representative is likely to just ignore your response and to move forward with a notice of deficiency and final bill for the proposed amount due.

Should I amend my return if I agree with the IRS CP2000 notice?

If the information displayed in the notice is correct, amending your return is not necessary.  Just sign and agree and return the notice back to the IRS.  If you forgot to include certain income (especially if you were self-employed), you should amend if you also forgot to include credits or expenses possibly related to that additional income. Just complete and submit a Form 1040-X, Amended U.S. Individual Income Tax Return.

If you lost your original return, you can request a return transcript on the IRS ”Get Transcript” page. You can also get one by calling the IRS directly or by completing and sending a Form 4506-T, Request for Transcript of Tax Return.

What if I agree to the underreporting of income and cannot pay the amount owed?

It is very difficult to deal with the IRS alone to resolve tax debt.  The first step is to hire a tax attorney to resolve the debt and certainly not a tax relief company or CPA.  Avoid tax relief companies at all costs as they are almost always dishonest and incompetent as to the IRS policies and procedures and the tax laws.

A tax attorney or tax law firm can assist you with the following tax resolution options:   penalty abatement, a payment plan, an offer in compromise (IRS settlement for less than you owe), a currently not collectible status and more.

Issues in a CP2000 usually can be resolved quickly and simply. The San Diego Tax Attorneys at Delia Law have many years of tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation for tax resolution at (619) 639-3336. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only.

IRS Form cp2000_english Example    down load from this link.

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Tax compliance with the IRS for tax resolution easy steps.

Tax Compliance – how to get in tax compliance with the IRS.

Looking to resolve your tax debt with the IRS?  Unaware of all of the steps involved?  The first step is always tax compliance.  You must be fully compliant in order for the IRS to consider certain tax resolutions. So, what exactly does compliance mean?

What is Tax Compliance?

Do not feel alone.  IRS tax liabilities can happen to anyone.  Many taxpayers make phone calls to tax attorneys for help in complete shame wondering if he or she will understand the hardship that caused all of their tax problems.  There are many reasons tax problems arise such as illness, family crisis, a turn in the economy to name a few, or maybe it is just due to a simple unintentional oversight.

Tax Return Compliance

To obtain some sort of tax resolution with an installment agreement or offer in compromise (settlement for less than you owe), the IRS requires that you be “in compliance.” All unfiled tax returns that are required to be filed must be filed.  Not a difficult thing to do, but it is quite common for taxpayers to be delinquent in filing their tax returns.

The next step is to identify the delinquent returns that need to be filed.  This is easily done by calling the IRS and requesting a “compliance check.”  The IRS representative will give you a list of tax return years that need to be filed.  Be sure to ask if any substitute returns have been filed by the IRS for those years.  Obtain wage and income transcripts and account transcripts for those years to assist you with filing.  This is important, especially if you do not have records of your own to prepare your returns for the non-compliant years.

Tax deposits and estimated tax payments

If you are self-employed or run a business, you must be compliant with all federal tax deposits and/or quarterly estimated deposits. This is where most taxpayers run into problems due to calculation errors or simply by missing a deposit due to various personal and business reasons.  Taxpayers put that money elsewhere and then try to make it up somewhere in the year and end up with tax debt plus penalties.

Many good, honest people fall out of compliance and run into tax-related issues.  Try not to avoid the situation.  Face your tax problems head on, educate yourself to get back into compliance or look to a tax attorney for help.

Estimated tax payments for individuals

In order to obtain tax resolution, all quarterly estimated tax payments must be paid.  They are due April 15th, June 15th and September 15^th of the current year and January 15^th of the following year.  Many taxpayer’s wonder how much they should be paying and how to estimate amounts.  It is easiest to look on your last tax return and divide the tax liability by four.

Also, your CPA can assist you with estimating those payments if you anticipate your next return to be substantially different than your present one. There is also IRS estimated tax payment information at IRS.gov that can assist you in determining your estimated payments in an attempt to eliminate future liability on your next return.

Estimated tax deposits for businesses

Just as certain individuals do, businesses may also have to make quarterly estimated payments toward future return years. It pretty much works the same, but in addition to paying your quarterly tax payments, businesses must also be current with their required federal 941 employment tax deposits and possibly with their 940 unemployment taxes, as well.

941 employment tax deposits are due either quarterly, monthly, or semi-weekly depending on the amount of wages that are issued each quarter. IRS Notice 931 can assist you with these types of filings and payments.

Tax return and estimated tax compliance is the IRS’s way of ensuring that taxpayers will not incur tax debt at tax time.  Stay ahead of this to avoid tax problems that may result in tax liens, bank levies and wage garnishments.

If you have questions about Tax compliance – The San Diego Tax Attorneys at Delia Law have many years of tax preparation and tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation at (619) 639-3336. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only.

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