IRS CP2000 Notice: Underreported Income (Proposed Changes)
A CP2000 notice means income reported to the IRS by employers, banks, or brokers doesn't match what's on your tax return, and the IRS is proposing a change to your tax — it is not a bill and not an audit.
Deadline calculator
The CP2000 clock runs from the date printed on the notice — not the day you opened it.
Estimate only, based on the standard 30-day CP2000 window. Your notice controls — always use the specific date printed on it.
What a CP2000 actually means
The IRS computer-matches every W-2, 1099, and 1098 it receives against your return. When something doesn't line up — a missed 1099, unreported stock sale, forgotten side income — the Automated Underreporter unit sends a CP2000 proposing additional tax, and sometimes penalties and interest.
It's a proposal, not a final assessment. You can agree, partially agree, or dispute it with documentation. Many CP2000s are wrong or overstated — for example, a stock sale where the IRS assumes a $0 cost basis and taxes the entire proceeds instead of just the gain.
How to recognize a real CP2000
The IRS sends it after comparing your return with information reported by employers, banks, and other payers. It's part of the review-by-mail process described in IRS Publication 5181, which also covers Letter 2030, CP2501, and Letter 2531. The proposed change can raise your tax, lower it, or leave it the same.
- It's one of a series: CP2000, CP2000A, CP2000B, CP2000C, CP2000D, and CP2000E. Check which one you received.
- The Response form has agree and disagree options. For a joint return, the IRS requires both spouses to sign if you agree.
- The IRS lists three ways to respond: upload through its Documentation Upload Tool, fax to the number on the notice, or mail to the address on the first page.
- Not every CP2000 asks for a signature. If yours shows a refund and doesn't request one, the IRS says you don't need to do anything for the refund to be processed.
What to do, step by step
- 1Read the notice and find the response deadline (usually 30 days from the date printed on it).
- 2Compare the IRS's list of reported income against your return and your own records (W-2s, 1099s, brokerage statements).
- 3If the IRS is right, sign the response form and arrange payment (a payment plan is available).
- 4If it's wrong or partly wrong, respond in writing with documentation — don't file an amended return unless instructed.
- 5If you can't respond in time, call the number on the notice and request an extension — silence turns the proposal into a real bill (CP3219A Notice of Deficiency).
Illustrative example
Example: partly agreeing and adding a missed deduction
Grace and Tom (illustrative taxpayers, not real clients) received a CP2000 proposing $3,200 more tax. It listed two unreported items: $1,900 of 1099-INT interest and $14,500 of 1099-B proceeds from selling mutual fund shares. The interest was a genuine miss. The sale was reported on their Schedule D, but under a broker's combined total, so the IRS matching didn't connect it.
They checked the disagree box and addressed each item. They accepted the interest. For the sale, they cited the Schedule D line and broke down the combined total, as Publication 5181 suggests. They also listed $300 of deductible educator expenses (the per-educator limit) that they had missed, with the receipts. They faxed the response with both names and SSNs on every page.
The IRS accepted the Schedule D explanation and sent a revised notice covering only the interest, with the missed deduction included. Both signed the revised Response form. Because they expected the review to take time, they had sent a payment for the amount they agreed to, marked as a 6603 deposit, which Publication 5181 says stops interest from accruing on that amount.
Names and numbers are made up to show how this notice typically plays out.
Sample CP2000 response letter (disagree)
Use this template when you disagree with some or all of the proposed changes. Put the notice's Response form (with the disagree box checked and your signature) on top, this letter behind it, and your proof behind that. Mail everything to the address on the notice — certified mail with return receipt — before the 30-day deadline, and keep a complete copy.
[Your name]
[Your address]
[City, State ZIP]
[Date]
Internal Revenue Service
[Address shown on your CP2000 notice]
Re: CP2000 notice dated [notice date]
Tax year: [year]
SSN: XXX-XX-[last four digits]
AUR control number: [number printed on the notice]
To the Automated Underreporter Unit:
I received the CP2000 notice dated [notice date] proposing changes
to my [year] federal income tax return. I do not agree with the
proposed changes. I have completed the enclosed Response form
indicating that I disagree, and I am providing the following
explanation and documentation.
The notice proposes additional tax based on [describe the item
exactly as the IRS lists it — e.g., "Form 1099-B proceeds of
$24,850 from XYZ Brokerage"]. This is incorrect because
[keep the reason that fits, delete the rest]:
- This income was already reported on my return, on
[form and line — e.g., "Schedule D, line 1b"].
- The reported proceeds do not reflect my cost basis of
$[amount], shown on the enclosed brokerage statement.
The correct taxable gain is $[amount], not the full proceeds.
- This income is not mine / the form was issued in error,
as shown in the enclosed statement from [issuer].
Enclosed:
1. Signed CP2000 Response form, "I do not agree" box checked
2. [Brokerage statement showing cost basis / corrected 1099 /
copy of the return page where the income appears]
3. [Any other supporting document]
Please correct the proposed changes accordingly. If any portion
of the proposal remains after your review, please send an updated
notice showing the revised amount. I can be reached at [phone
number] if you need anything further.
Sincerely,
[Signature]
[Printed name]Don't file an amended return (Form 1040-X) unless the IRS specifically instructs you to — the CP2000 process handles the correction itself, and a 1040-X filed on top of it routinely crosses wires and delays resolution by months. If you partially agree, say exactly which items you accept and which you dispute, and only document the disputed ones.
Mistakes that make a CP2000 worse
- Filing a 1040-X automatically. The IRS says to amend only if the CP2000 is correct and you also have other income, credits, or expenses to report. If you do, write "CP2000" at the top of the 1040-X.
- Faxing pages without identifying information. Publication 5181 asks for your name and SSN or TIN on every faxed page so nothing gets separated from your case.
- Only one spouse signing an agreement on a joint return. The IRS requires both signatures on a CP2000 agreement.
- Sending a big new batch of documents after the review instead of during it. Publication 5181 says substantial new documentation sent at the appeals stage gets sent back to the original office for consideration.
- Assuming there's no way to stop interest while the case is open. Publication 5181 says paying the proposed amount and designating it a "6603 deposit" stops interest from accruing on that amount while you dispute.
What happens if you ignore a CP2000
If you don't respond, don't get more time, or don't reach agreement, the IRS sends a Statutory Notice of Deficiency by certified mail. You then have 90 days from that notice to petition the U.S. Tax Court, and that period can't be extended. If you don't petition and don't reach agreement, the proposed tax is assessed.
Often comes before a CP2000
Common questions
Is a CP2000 an audit?+
No. A CP2000 is an automated income-matching notice, not an examination. But ignoring it leads to a Statutory Notice of Deficiency and a real assessed balance.
What happens if I ignore a CP2000?+
The IRS finalizes the proposed changes, issues a Notice of Deficiency (CP3219A), assesses the tax plus penalties and interest, and moves toward collection. Your response window is the cheapest place to fix errors.
Can a CP2000 amount be wrong?+
Frequently. Common examples: stock or crypto sales taxed on full proceeds because cost basis wasn't reported, income that was actually reported on a different line, or a 1099 that isn't yours. Documentation usually resolves it.
How do I write a CP2000 response letter?+
Keep it factual and item-by-item: state whether you agree, partially agree, or disagree; for each disputed item, name the income item as the IRS listed it, explain where it was actually reported or why it's wrong, and attach the proof (corrected 1099, brokerage statement showing cost basis, the return line where it appears). Include the response form from the notice on top, sign it, and mail it to the address on the notice with proof of mailing before the 30-day deadline.
Checked against IRS primary sources — see how we source these guides. You can verify any notice directly at IRS.gov. The dates and instructions printed on your specific notice always control. Official IRS explanation: Understanding your CP2000 series notice (IRS.gov).
- IRS: Understanding your CP2000 series notice
- IRS Publication 5181, Tax Return Reviews by Mail (PDF)
- IRS: Understanding your CP3219A notice
Go deeper
Received a CP2000? Get it handled.
Talk to a tax specialist about your notice — free, no pressure, no judgment.