How to Handle IRS Audit Notice CP2000
If you receive an IRS Notice CP2000, what do you do next?
An IRS Notice CP2000 means that you are under IRS audit and should be handled seriously and urgently. Remember, being audited can expose you to legal and financial risk.
Here is a list of things you should and should not do if you receive this notice.
1. Pay Attention to the Response Date
On the notice, there is a “respond by” date listed. If you don’t respond by that date, you could end up with a big tax bill that could have been avoided.
If it is already past the date, it is still worth reaching out to a tax attorney to see if they can help the overall situation by responding.
2. Don’t File an Amended Return
Often when someone receives a Notice CP2000, the first thing they do is reach out to their tax return preparer. The tax return preparer may think they are helping by filing an amended return on behalf of their clients.
This is not the case. When you are under audit, the IRS may consider the amended return, but they don’t have to process it.
3. Don’t Call the IRS
A Notice CP2000 requires a written response. If you call IRS, the person you speak to will take notes. However, those notes won’t be considered by the agent who is handling the audit.
Calling IRS is, simply put, a waste of time.
4. Hire an Experienced Tax Attorney
An experienced tax attorney can correctly form a written response to the notice. There are two main points an experienced tax attorney will be able to argue on your behalf:
- The proper way to treat the income that IRS thinks was underreported
- Why you should not be penalized
The penalty for underreported income can be 20% of the income that wasn’t reported. This is something you want to avoid!
Remember that while you can handle this response yourself, you will be doing yourself a disservice. To be effective, you need a well-organized legal response.
It’s also important to note that your CPA or tax return preparer cannot respond effectively either. Tax return preparers prepare tax returns.
Tax lawyers argue legal issues. That is exactly what you need when you are under IRS audit.
Contact Tax Law Offices today. We know how to win audits!