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What is an IRS CP2000 Clarification Letter?

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Angry IRS letterOne of my friends recently got a letter in the mail from the IRS and it freaked them out. The first time I got my official coupons for quarterly estimated payments I freaked out a little because all I saw was an official IRS letter that was thick and ominous looking.

Fortunately, it was “just” a CP2000 letter.

A CP2000 is the letter than the IRS sends out when they want more information from you. The scary part about the letter is that sometimes is says that you may owe more taxes (never a good thing). Fortunately, owing more taxes is generally the worst case scenario. In many instances, they just need to ask you some questions because there were some discrepancies.

Why did you get this? When you file your tax return each year, the information on your return is compared with the information received from other sources. The W-2 that your employer sent you is also sent to the IRS. When there is a discrepancy, the IRS wants to know why. When you consider how complicated the tax return is, with all of your sources of income, various credits and deductions, and the several thousand page rulebook behind it, it’s not surprising that something could slip through the cracks. How many bank accounts do you have? Did each one send a 1099-INT to report interest? Those sorts of situations trigger these CP 2000 clarification letters.

How to properly response: How you respond will depend on how complicated your answer to the questions are. If it’s a simple clarification (“I included the income in this line”) then do it by phone. Call 800-829-8310 if the letter was from Brookhaven, Ogden, or Philadelphia; call 800-829-3009 if the letter was from Atlanta, Austin, or Fresno.

If it’s more complicated and you need to attach documentation like a 1099 you missed or corrected W-2′s, then you’ll have to include a written statement and send it in by mail. If you need time, they will grant you a 30 day extension if you request one and even longer for special cases. You must respond in some way before the due date of the notice.

You can read more about CP 2000 at the IRS.gov website as well as this SMart Money article on the ten things the IRS will not tell you and Bankrate’s mailbag answer on clarification letters.

Remember, there’s no need to panic because this isn’t a bill and you haven’t necessarily done anything wrong.

(Photo: rosengrant)

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20 Responses to “What is an IRS CP2000 Clarification Letter?”

  1. savvy says:

    We got one of these last year in reference to our 2006 return. It turns out I had reported the wrong W-2 income (used 2005 instead of 2006, not sure how I did that).

    Once I figured out the problem, I responded to the IRS with a copy of the correct W-2 as well as what I thought I owed. They agreed and because it was an honest mistake and I responded promptly (and paid the agreed amount), they waived the penalties.

    Note that, generally speaking, anything that affects your federal return will probably affect your state return as well. I filed an amended state return and got back a whopping $8 :-)

  2. thomas says:

    I would wet myself twice if I got a letter from the IRS.

  3. joshua says:

    All I got out of this was Fallout 3 is greatness.

  4. ebolooaaa says:

    Got one of these letters today, Dec. 2009. Claiming some adjustment to my 2007 returns. I was able to call the number listed and talk with one of the IRS people and after informing him that it was the IRS that missed my deduction…..he agreed (NOW I’m frighten). He stated that a letter or cancellation/form would be forward to be in 4 weeks……but this is where they get you…The letter that I got from them states that I must respond to this letter using the form send to me, by them by Jan. 2010, way less then the 4 week cancellation form I’m suppose to get from them..so I think, telephone conversation or not, I’m going to send their form back marked Option # 3 I DO NOT AGREE WITH ANY OF THE CHANGES, I enclosed documentation to support the entries on my original returns.

    • silcarsam says:

      Got also one of these, have until Jan 2010 to respond to them, I call and explain but simply will send with a X on option C and also an explanation letter.

  5. LeLe says:

    I just have a question… hopefully someone knows. I received one of these and marked the option 3 on the letter and sent back. Since I sent it in I have not recieved any additional letters or contact at all. So I have proof that they had mistaken the years… But I am not sure if no response is a good response or if I should get some form of notification. So now when i file my current taxes… i am worried that if there was something wrong then, i would not recieve the money they owed to me for 2009. Im concerned.. if anyone could help i would appreciate it.

  6. Joseph says:

    I got this letter one time too and I as well almost wet my pants. Can I ask someone a question though? I filed my taxes on ExpressTaxRefund.com on Feb. 13th, when should I be expecting my refund?

  7. Sickofitall says:

    I received one of this letters today saying i owe, I put two and two together called my ex,wife and asked if she filed her income tax using my daughter ss#. Well she did by law of my divorce she cant I claim her. What can I do this is not the first time she,s done this What should I do

    • John D says:

      If I understand what you wrote, your ex-wife did something illegal. Send a photocopy of your divorce decree with your response to the IRS. Highlight in yellow the portion that says you get to claim your daughter. Send it certified. Let your ex deal with the fallout.

  8. michael a says:

    I/we received the same type of letter. We checked all of the boxes stating we dispute the claim and sent along all of the necessary information. Now the dumb part, mistakemly we also signed the dang thing…is this a serious mistake?

  9. Israel-Chicago says:

    I received the same letter yesterday, almost wet my pants , we ( my wife and I) made a mistake when we filled out our taxes from 2009, we checked letter “A” and sent a check, hopefully this is over :( .

  10. Mark says:

    I just got one of these today, I was in a hurry when I filed my taxes, and I sort of fudged my investment I claimed a $200 loss for the year.. I did not include a schedule D. The IRS told me I owe them $25,000. SO I just finally filled out the proper schedule D, and also attached Forex Trades transactions. I actually lost 3500 for the year not the $200.. So actually the IRS owes me money. Anyways, going to mail everything in. Its kind of nice to get things done properly. Am better prepared for this year now too. Knowing how to properly file things.

    • Anonymous says:

      Good for you. It’ll be comforting to know your tax return was corrected and you now may be entitled to a refund. Sounds like you replied correctly.

  11. MarkB says:

    I received one for 2009. It was clear that somehow that one 1099 from an income source was counted twice. I corresponded with IRS but the IRS computer still decided I should have to go to Tax Court. So I paid $60 to file for Tax Court. If I could have reached anybody at IRS to physically examine the evidence, it wouldn’t have gone to court. The IRS attorney who finally examined it realized IRS did not have a case and it was ruled in my favor. No extra taxes. This is a case of the IRS being de-funded, I believe, so that there is no live person to answer the phone and fix problems.

  12. PhoenixM says:

    I just got one of these on Friday; I felt trepidation when I saw the thick envelope, but it turned to amusement when I opened it and saw that I allegedly owed them $18K, because then I knew it had to be a mistake.

    What happened was that I’d received $23.86 from the interest on my security deposit at my old deposit when I moved out, and I’d reported it on my taxes just like I should. But when the apartment complex filled out the 1099-INT, they put a dollar sign before the 23.86, which they’re actually not supposed to do.

    So here’s where it gets really amusing. The IRS’s OCR software apparently interpreted that dollar sign as a “5″. And their software didn’t see the decimal point either. Therefore, they concluded that instead of receiving $23.86, I’d received $52386!

    I’m not worried about this, since I know I’m in the right. But still… our tax dollars at work!

    • Andrew Lin says:

      Really??? A $52K interest payment on a 1,000 or so deposit and the IRS can’t tell there’s a mistake?

  13. Julio says:

    You should contact their 800 number and ask for a transcript of account, the transcript usually shows you the details of entry made in your return. It will be easier to identify any error this way.

    You can also find additional information and a more in depth analysis of a CP2000 letter here mycpa.net/press/73-irs-cp2000-notice.html

  14. Yvonne says:

    I just received a CP2000 IRS form stating I owed $2800 from 2011.
    I checked my tax return and all the amounts that they said were not reported, actually were. I gave them a call right away. It turns out they owe me $333. For once it ended in my favor. :)


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