Understand the IRS Notice CP 2000: Proposed Changes to Your Tax Return. This notice indicates discrepancies between your filed tax return and IRS records, potentially leading to additional taxes. Learn how to respond, avoid penalties, and resolve issues effectively with expert guidance from the Law Offices of Nick Nemeth. Watch now : https://youtu.be/gOC5UK2jhrA
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00:00Hi, Jamie Flores with the Law Offices of Nick Namath. Today, I'm going to go over a CP2000.
00:05So the letter notice is on the top left part of this notice. And what is a CP2000?
00:11So these would go out every year. They usually go out two years after the tax return was filed.
00:16So right now we're seeing CP2000s that are coming out right now for about 2022.
00:21Sometimes we're seeing 2021, but generally right now it's for 2022.
00:24All this notice is, it's a serious notice. Do not just throw it in the trash, okay?
00:30Because if you don't respond to this notice, the IRS is going to continue on with an assessment.
00:35So this one is not a bill and it tells you, hey, this is not a bill.
00:39Just there is something that's incorrect on the tax return that you filed that's different than what was reported underneath your social security number or EIN number to the IRS.
00:50And so it's going to go over the proposal of what those differences are.
00:54What generally are they? So a lot of times it is going to be a home sale that you failed to report.
01:00It's going to be a retirement distribution or an IRA, a withdrawal.
01:05It could be stock exchanges.
01:09It could be just income that you failed to report on your tax return or a mismatch of a number of income on your tax return.
01:18There are a lot of different reasons you would get a CP-2000, so don't panic.
01:23It just probably needs a response.
01:25This notice, and it's usually about seven or eight pages, you have the option to agree or disagree with these changes, sign the response form, and mail it back in with documentation as to what you're disagreeing with.
01:38You would then attach either an amended return in response to the CP-2000 with the changes that should have been on the original return,
01:47or you would just attach whatever schedules are needed in order to fix the changes.
01:53If you agree with the changes because you just happen to leave off maybe some 1099 income that you don't have any expenses for,
02:02then just agree and move on, and then you'll get a bill usually in about 30, 45 days,
02:07and then you need to make arrangements to pay that bill.
02:11But this is a mismatch of information that you reported to the IRS.
02:16They want to go in and fix it.
02:18If you fail to respond, they will send you a notice of determination, and then you will get a bill.
02:25But you do have rights to appeal their decisions, and it's also going to break down the penalties,
02:31the interest, and reasonable cause penalty abatement for the penalties.
02:36If you underreported by a certain percentage of your income,
02:41then you're also going to get the accuracy-related penalty, which is a lot of money.
02:45So if you need help, give us a call.