Guide

How to answer a CP2000, path by path

The CP2000 says the IRS's computers found income your return didn't show. It is a proposal — nothing is assessed yet — and the response form gives you three doors. Pick by what the documents say, not by what you hope.

First: rebuild the number yourself

Before choosing a door, line up the year's actual paperwork: every W-2 and 1099, brokerage statements with cost basis, and your filed return. A large share of CP2000s are partly right — a forgotten 1099 — and partly wrong: the same income counted twice, or stock sold where the IRS assumed your cost was zero.

Door 1 — Agree

Sign the response form, pay if you can (a plan exists for under-$10,000 balances with guaranteed acceptance — see the payment-plan page), and keep the signed copy and proof of mailing. Done: the assessment that follows matches the notice, and filing nothing further is correct.

Door 2 — Partly agree

Mark the items you accept and the ones you don't, with a document per contested item: the corrected 1099, the basis statement, the closing disclosure. The IRS recalculates; a revised notice follows. Nothing about partial agreement weakens the parts you contested.

Door 3 — Disagree

Explain item by item, in writing, with documents attached — 'this income was reported on Schedule C, line X' beats 'this is wrong.' If the examiner holds firm, the case can go to Appeals, and after that the 90-day letter (CP3219A) opens Tax Court. Each step is in writing and each step has a clock.

The mechanics that decide outcomes

The letter is decoded. Now answer it right.

The free decoder tells you what the letter means and when it is due. The Kit is the doing: response letters for every notice family, the penalty-relief scripts, the payment-plan and Offer in Compromise reality checks, and the proof habits that keep a sent letter from becoming a lost argument.

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Questions

The CP2000 wants more than I owe in tax — why?

Because the notice computes tax, interest, and often a 20% accuracy penalty on the whole adjustment, sometimes with zero cost basis assumed. Correcting the inputs usually shrinks all three at once.

What if I truly missed the income?

Then agree, and look at the penalty line: a clean prior record plus a simple explanation sometimes removes the accuracy penalty, and a failure-to-pay penalty can qualify for first-time relief. Agreeing to the tax never requires agreeing to every penalty.