Will a CP200 Delay My Refund?

No, your tax refund will not be delayed as the CP2000 is only a notice, notifying you that the information reported by a third party doesn’t match your tax return. 

A CP2000 notice from the IRS is only a notice and proposal to adjust your income, payments, credits, or deductions based on discrepancies between the information reported by third parties and your tax return. 

It is important to understand that a CP2000 is not a bill but a notice indicating a potential issue that needs to be addressed. Receiving a CP2000 notice will not necessarily delay your tax refund, as it is primarily a notification of discrepancies rather than a demand for immediate payment. 

However, it is crucial to carefully read the notice and respond by the deadline to avoid potential penalties or further complications. If you agree with the proposed changes, you can resolve the matter by submitting the response form with any necessary payment. If you disagree, you must provide documentation to support your position and communicate with the IRS within the specified time frame.

Understanding your CP2000 notice

A CP2000 notice from the IRS is a notification that there are discrepancies between the information on your tax return and what the IRS has received from third parties. It is important to read the notice carefully to understand the nature of the discrepancies and the information the IRS is requesting.

When you receive the notice, you must decide whether you agree or disagree with the proposed changes by the IRS. 

If you agree, you simply need to sign and return the response form by the due date, potentially including payment if additional taxes are owed. 

On the other hand, If you disagree, you must provide documentation to support your position and submit it to the IRS by the deadline. The paperwork to include may be corrected W-2, 1099s, or any missing forms that support your statement. 

A timely response is recommended to prevent any additional penalties. 

Avoiding CP2000 Letters

To avoid receiving the CP2000 notice from the IRS, ensure that your tax returns are accurate reflecting all your income and financial transactions. 

What Should I Do If I Disagree with The CP2000 Notice?

If you disagree with the information in the CP2000 notice, you need to respond promptly to avoid any penalties. You will need to review the notice to understand any discrepancies as this will help you determine why you disagree with the notice. 

Communicate with the person who helps you with your taxes, and collect any relevant documents that support your statement like W-2, 1099, or other records. 

Once you have gathered all of the missing documents, you need to complete the response form and attach a document stating why you believe your original return was correct. Make sure all of this is done before the due date to avoid any additional penalties.

Additional details about the CP2005

The IRS Notice CP2005 is to inform taxpayers that their Form 1040 Inquiry is closed. The IRS Automated Under-reporter Unit (AUR) issues IRS notice CP2005 to inform taxpayers that AUR is closing their case with no changes made to their tax returns. This means that the IRS accepted the information taxpayers sent them and they are not going to change their tax return. 

They have closed their review of it and they want them to know. This notice falls under the category of “tax return accuracy”. Before taxpayers receive this particular notice, they usually receive IRS notice CP2000 which indicates that their tax returns don’t match income information the Internal Revenue Service (IRS) has (like Forms W-2 and 1099). The notice is also called an under-reporter inquiry. 

This notice basically proposes taxes, and possibly penalties, you might owe for missing income on your return. Sometimes, the Internal Revenue Service can question deductions or credits you took that don’t match information statements filed under your Social Security Number. So receiving IRS notice CP2005 is simply telling you that your case has been resolved. With that said, we would look at the common reasons taxpayers receive notice CP2005. They include:

• The IRS Automated Under-reporter Unit (AUR) informed taxpayers that the IRS was reviewing their tax return because of possible discrepancies between their income, credits or deductions reported on their return and information the IRS received from others such employers and banks.
• After researching your client’s situation, AUR determined that no changes needed to be made to your original tax return.
• The AUR sent CP2005 to inform you that your case has been closed and there are no changes to the original return filed with the IRS.

After receiving this notice, all you need to do is to read it carefully and understand what the IRS is trying to tell. The letter is straight-forward and brief so you don’t need the assistance of a tax professional. You don’t have respond to the notice but you should keep a copy of this notice in your files for future references. You may be wondering what Automated Under-reported cases are. According to the IRS definition, “Automated under-reporter” (AUR) cases are systemically identified through computer matching of tax returns with corresponding payer information documents. 

Cases are selected for inventory in a manner determined to provide overall compliance coverage. Selected cases undergo an in-depth review by a tax examiner to identify under-reported and/or over deducted issues which require further explanation to resolve the discrepancy.The automated under-reporter (AUR) unit is a division of the IRS that screens tax returns for mismatches between the income you reported on your tax return and the income reported to the IRS by your employers, banks, and other payers.

Under Reported Income

According to the IRS Definition, The IRS compares the payment information reported to the IRS by employers, banks, businesses, and other payers on income documents (Forms W-2, 1098, 1099, etc.) to the income, credits, and deductions you report on your income tax return. The Automated Under-reporter (AUR) function uses an automated system for this comparison and sends out a Notice CP2000 if you didn’t report income on your return that was reported to the IRS by a payer or if it appears that payments, credits, and/or deductions are overstated.

The IRS compares information statements (Forms W-2, Forms 1099, etc.) reported under your Social Security number (SSN) to the information on your tax return. If the IRS’ computer system finds a mismatch, it may mean that you have under-reported income. The IRS may send an under-reporter notice to request more information from you to resolve the income mismatch. In order for you to understand notice CP2005, you need to first understand what notice CP2000 entails.

Important Factors to Consider

• The IRS can take long to contact taxpayers about the end result of the issue. The reason is that their computer systems match the information taxpayers report on their tax returns with information reported by employers, banks, businesses, and others. This matching takes several months to complete, which explains the delay to notify taxpayers.
• If you sent the IRS a payment based on the changes the IRS proposed, you will definitely receive a refund check in 4 to 6 weeks as long as you do not owe taxes or other debts the IRS has to collect. You can contact the IRS if you don’t get a refund for any payment you made on the proposed changes. You contact them by mail or by calling the number provided on the CP2005 notice you received to know why you have not seen your refund.
• If you petitioned the United States Tax Court, the Office of Chief Counsel will contact you about closing your petition.
• If you feel the IRS closed my case without changing your account and you think the IRS closed the account in error, feel free to call the toll free number provided on the notice sent to you.
• If you receive another notice or letter and it is about this matter, pay no attention to it. If it’s about another matter, read it carefully and follow its instructions.

Tax Tips

• Taxpayers should check the records they get from their employer, mortgage company, bank, or other sources of income (W-2s, 1098s, 1099s, etc.) to make sure they’re correct.
• Taxpayers should include all the income they received during the year on their tax returns.
• Taxpayers should follow the instructions for their tax returns on how to report income, expenses and deductions.
• Taxpayers should wait until they get all of their income statements to file their tax returns.
• Taxpayers should file an amended tax return if they receive any additional information after they have filed their tax returns.
• Taxpayers should consider filing their taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for.

NOTICE DEADLINE –There is no deadline for this notice. In fact, you don’t even have to respond to the IRS in anyway. However, you can choose to contact them if you are expecting a refund from them as a result of some changes they may have made on your tax return form.

Beware of IRS CP2000 Scams

If you receive any IRS CP2000 via email, it is a scam. However, if you receive it via mail, do not call back the number on the document. Instead, call the IRS number at 1-800-829-1040 to ensure it is a valid notice by the IRS.

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