Those rules are designed to aim at taxpayers who have previously under-reported, high-asset taxpayers who might be more likely to under-report, and a mix from all taxpayer segments. The automated checks that take place are typically not subject to manual verification, which means there’s a reliance on the data being correct. There is an assumption that data held within the IRS reporting system is correct and the taxpayer is wrong. This means that the taxpayer must be able to identify and demonstrate any errors, as the IRS won’t do their own checks. Be sure to respond immediately to any IRS notice you receive with the information the agency requests. Letter 488C is sent to verify your identity, and it could mean that someone tried to file a tax return under your name.

Tax-Related Identity Theft And 2022 AUR Changes

The IRS receives information from third parties, such as employers and financial institutions. Using an automated system, the Automated Underreporter (AUR) function compares the information reported by third parties to the information reported on your return to identify potential discrepancies. The CP2000 isn’t a bill, it’s a proposal to adjust your income, payments, credits, and/or deductions. The first step if the IRS finds something suspicious is to send you Letter 488C, which asks you to respond and verify your identity within 30 days. The agency will verify your identity and will then ask you if you filed the tax return it has questions about. The IRS will remove it from your records if you didn’t file it, and if you did, the agency will move forward with that tax return processing.

Pay or settle any tax due

If you don’t agree with all of the proposed changes, mark the appropriate box on the Response form and send it to us along with a signed statement explaining why you disagree. Send the Response form and supporting documentation to the address listed on the notice by the due date. This will allow IRS the ability to contact you directly and may shorten the time it https://x.com/BooksTimeInc takes to resolve any outstanding issues.

Tax1099.com

If you don’t pay the amount due immediately or make payment arrangements, we can file a Notice of Federal Tax Lien publicly establishing our priority with your creditors. If the tax lien is in place, you may find it difficult to sell or borrow against your property. The tax lien would affect your ability to get credit ― which may harm your credit rating. This notice also explains the denial or revocation of a United States passport. The Fixing America’s Surface Transportation (FAST) Act legislation, which generally prohibits the State Department from issuing or renewing a passport to a taxpayer with seriously delinquent tax debt.

Understanding your CP2000 notice

A tax professional from our trusted tax resolution partner can help you navigate the CP2000 notice and any taxes owed from it. Book a free call to learn how we can help you and discuss your options for navigating your CP2000 notice. If you’ve received a CP2000 notice from the IRS and need help sorting out your taxes, Bench (that’s us!) has a specialized team who can help. If your CP2000 doesn’t come with a response form, it might come with alternative instructions for https://www.bookstime.com/articles/cost-of-debt responding to the IRS. If the IRS doesn’t accept your response, you will receive a letter from the IRS explaining the reasons why your response/appeal cannot be accepted. Thoroughly review the specifications laid down by the IRS and cross-check the information with the documented 1099s, W-2s, and more.

Understanding your CP504 notice

We can also file a Notice of Federal Tax Lien if we haven’t already done so. A lien is a public notice to your creditors that the IRS has a right to your interests in your current assets and any assets you acquire after we file the lien; it can affect your ability to get credit. Besides wasting my time, this just adds to the backlog of correspondence the IRS must weed through. We can represent you, communicate on your behalf, and respond appropriately to the IRS CP2000 Notice.

• Never send your number to other people or third parties unless it is a trusted institution, and avoid sending it to anyone over email.
• The IRS CP2000 letter occurs specifically when there is reported income from a 3rd party source that was not included on your originally filed tax return when you filed.
• Make sure your computer has firewall and antivirus protection to prevent attacks, which can lead to a hacker getting your personal details.
• You must also provide a clear written explanation + documentation and evidence (if required) to support your claims and submit the appeal before the IRS deadline.
• It is your final reminder telling you that we intend to levy your wages, bank accounts, or your state tax refund because you still have an unpaid balance on one of your tax accounts.
• Here’s a sample response letter to the CP2000 that you can download as a Word document.

As the name implies, the AUR is a partially automated process whereby your tax return is aur control number matched against information returns gathered by the IRS. Information returns and schedules available to the IRS are extensive, including much more than just W-2 and 1099 forms. Once the taxpayer is matched to their Social Security number, the tax and information returns are compared to identify mistakes and potential omissions on the tax return.

The IRS computer systems have automatically generated the IRS CP2000 letter, which calculates the additional Income Tax, statutory penalties & interest against you. If a taxpayer owes money to the IRS or is eligible for a refund after AUR corrects errors, the IRS will send a Notice CP2000. Once you respond to your CP2000, the IRS will send you a new, separate tax bill.

IRS CP2000 Option 2: Do not Agree with proposed changes

You can also apply for a payment plan online by using the Online Payment Agreement Tool which is the fastest way to get an installment agreement approved. Instead, we recommend writing a cover letter to the IRS, explaining the specific reasons for your disagreement in a clear and concise manner. By submitting your position and documentation directly to the IRS CP2000 unit handling your case, you can ensure that your substantiation, calculation, and any additional information are processed efficiently. The IRS will review your appeal and get back to you based on the case you have built up for yourself.