La Quinta, CA
(760) 895-3516

Thursday, April 30, 2015

What to do if you receive a CP2000 from IRS

  • Pay the bill OR
  • Call/write the IRS and explain any mistakes
If you've received a CP-2000 notice from the IRS, it can be stressful if you are unsure what to do. I recently worked with a client who had reported a partnership income from a K-1 as a dividend on his 1040. Sure enough, the IRS sent him a CP-2000 notice stating that he had not reported the K-1 income. The IRS corrected the partnership income to go into line 13. Here's the kicker that was causing my client some stress...

The IRS did not argue or even acknowledge that the amount that was mistakedly put into line 9a of the 1040 was incorrect. The IRS does not like to argue that you paid too much taxes, they like to leave that up to you.

I recommended my client not to file an amended return (1040X) because there was no new information to report. He had reported all his income originally and the only problem was that the income was put into the wrong box. Essentially, the IRS proposed a resolution of paying tax on the dividend (of which there was none) and the partnership income.

My solution was to call the IRS according to the contact information on the top right hand side of the CP-2000 notice and explain the mistake. The IRS would see the mistake and accept that it is more likely that a mistake was made than my client receiving a dividend and partnership distributions for the exact same amount when box 13 was left empty.

The IRS may ask you to send in a Statement of Disagreement. They may ask you to fill out a form, write a letter explaining, or send in an additional IRS pub form.
Remember, every individual situation is different, consult a tax preparer or tax lawyer before proceeding. If you are in the Southern California area, specifically Coachella Valley, call Borders Bookkeeping for a free consultation.
Borders Bookkeeping
(760) 895-3516