A CP2000 proposes changes to your return based on a mismatch with what employers, banks, or brokers reported - here's what that actually means, and what to do next.
A CP2000 is an automatically generated IRS notice that flags a mismatch between the income and payments reported on your tax return and what third parties - employers, banks, brokers - reported to the IRS directly. It proposes specific changes to your tax, penalties, and interest based on that mismatch. It is generally not itself an audit, but it's also not something to set aside; it comes with a real response deadline and real consequences for missing it.
The IRS's matching system compared the income documents filed under your Social Security number against what your return reported, and found a difference. That doesn't necessarily mean you made a mistake - it could be a timing issue, a duplicate filing by a third party, or a genuine omission. The notice explains specifically what doesn't match.
A few reasons this notice gets triggered.
An employer's reported wages don't appear on your filed return.
Contract, interest, or other 1099 income wasn't included on the return as filed.
Stock or investment sales reported by a broker don't match what was reported.
The cost basis used for a sale differs from what the broker reported to the IRS.
A 401(k) or IRA distribution wasn't reported, or was reported differently than the 1099-R.
Reported 1099-NEC or 1099-K income doesn't line up with what was filed on Schedule C.
The notice will show the income or item in question, the tax the IRS calculates would result from including it, and any related penalties and interest. This is a proposal, not a final bill - your response determines what happens next.
Start with your original return and the specific income document referenced in the notice. If it's investment-related, your brokerage's cost-basis statement matters - the IRS often only has the sale price, not what you actually paid for the asset, which can make a proposed change look larger than it should be.
If the notice is correct, you can sign and return the response form agreeing to the changes. If it's wrong or incomplete - a duplicate 1099, an already-reported item, an incorrect cost basis - you can disagree and submit documentation supporting your original return. Partial agreement is also possible when only part of the notice is accurate.
If the deadline passes with no response, the IRS generally proceeds with the proposed changes as a formal assessment, which can lead to a subsequent bill, penalties, and eventually collection action. Responding - even to disagree - preserves your options in a way that silence doesn't.
We review the notice against your actual return and supporting documents, help you determine whether the proposed changes are accurate, and prepare a timely, documented response - whether that means agreeing, disagreeing, or something in between.
Share a few details and we'll review your situation before reaching out - this doesn't replace responding to the IRS by your own deadline.
Generally, no. A CP2000 is an automated notice comparing your return to third-party information returns (W-2s, 1099s, etc.) - it's a proposed adjustment, not the formal examination process an audit involves. It still needs a timely, documented response.
See other common IRS notice types and what they generally mean.
Learn MoreIf your CP2000 response results in penalties, see what relief may apply.
Learn MoreSee the full range of IRS and state tax issues we help resolve.
Learn MoreA CP2000 has a real response window - let's review it together before it becomes a bigger problem.