Approximately sixteen to eighteen months after the filing deadline each year, the IRS’ computers begin humming in the ‘Automated Underreporter Unit.’ These computers match information reported by third parties, such as financial institutions, mortgage companies, employers, etc, to information reported on individual income tax returns. Where a discrepancy is noted, a notice, generally a ‘CP2000’ is provided to the taxpayer.
Notice CP2000 is a notice of proposed changes. Taxpayers have 30 days to respond to the notice before the IRS issues a ‘Statutory Notice of Deficiency,’ also known as a 90-day letter or ‘stat’ notice.
These notices are often of dubious accuracy. Many are related to unreported stock transactions or non-taxable sales of primary residences, and have grossly inflated proposed balances due. Regardless of the balance due, you should forward any notice you receive from the IRS directly to our office.
If you have received an IRS notice, please e-mail it to your tax professional or fax to (480) 345-0033 for a complementary review.