Nothing strikes fear in the hearts of people more than
receiving an IRS letter in the mail.
Most IRS Notices are a notice called CP-2000.
The IRS Notice CP-2000 shows proposed changes to your income tax return.
It is NOT a bill. You have an
opportunity to disagree, partially agree, or agree with the proposed
changes.
This notice is merely the IRS requesting that you verify the income, credits, and deductions
reported on your tax return because it is different from the
information the IRS received from other sources. Keep in mind that all employers, banks, investment firms, property sales, partnership K-1 information, mortgage interest, etc is reported to YOU AND THE IRS.
What causes a CP-2000 to be issued?
Most of the time taxpayer's forget to report things on their on their tax return such as interest income on small bank accounts. There are times when taxpayers have traded stocks on E*trade and have "forgotten" to mention this to their CPA. Especially because the taxpayers assume that since they lost money, it really doesn't matter. Keep in mind that the IRS receives information on only the full SALES PRICE. The IRS does not know if there is a gain or loss on your return until your report it. Omitted interest and dividends and stock sales account for approximately 90% of the IRS Notices CP-2000.
What should you do if you get an IRS Notice?
- Fax a copy of the IRS notice to my office @ 925-680-0108.
- Sign a Form 2848, Power of Attorney so I can speak to the IRS about your situation
- Review the discprepancies listed by the IRS and determine if you properly reported your interest, dividends, and stock sales.
- Allow us to respond to the IRS on your behalf. It is important that we respond to the CP 2000 by the due date shown
on the notice. If you don't, the IRS will assume the proposed changes are
correct and continue processing the case as a "BALANCE DUE".
- Don't write a check to the IRS or FTB until my office has reviewed the notice.
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Some notices are merely adjustments for interest and penalties.
Keep in mind that your taxes are due to the IRS and FTB by April the 15th. If you pay your taxes at a later date, both government agencies will charge you penalties and interest. The penalties and interest will continue to accrue until you have made your payment in full. Some notices are merely adjustments or reminders for this interest and/or penalty.
Some notices are actual notices of "audit".
Some of these notices are regarding an actual "audits". Audits take significant time
away from your business and family, requiring you to gather mounds of
records substantiating each and every item reported on your tax return
and develop a comprehensive understanding of tax law.
