A CP2000 is not a bill, and it is not an audit — it’s a computer’s proposal, and the computer is frequently wrong in your disfavor. You generally have 30 days to respond. Respond well and the number often shrinks, sometimes to zero. Ignore it and it hardens into a real bill with penalties attached.
Every W-2, 1099, and brokerage statement you receive also goes to the IRS. Their Automated Underreporter system compares those third-party reports against your filed return, and when something doesn’t match, it generates a CP2000: a proposed recalculation of your tax, plus interest and often a proposed accuracy-related penalty.
The key word is proposed. Nothing on that notice is final. It becomes final only if you agree to it — or if you ignore it, in which case the IRS follows up with a Statutory Notice of Deficiency and the proposal hardens into an assessment with far fewer ways out.
Missing cost basis. The classic: you sold stock or crypto, the broker or exchange reported the gross proceeds, and the IRS computer taxed the entire sale as profit — as if you acquired it for free. A $40,000 sale with $38,000 of basis shows up on a CP2000 as $40,000 of unreported income. The fix is documentation, not payment.
Income reported in the wrong place. The income is on your return — on a different line or schedule than the computer expected. Common with 1099-NEC income reported on Schedule C, retirement rollovers, and 1099-K amounts.
Genuinely missed forms. Sometimes a 1099 really did get missed. Even then, the proposed tax is often overstated — missed income usually comes with missable deductions, and the penalty is frequently negotiable when the facts are ordinary.
You generally have 30 days from the notice date (the deadline is printed on it) to respond in one of three ways: agree and arrange payment; disagree entirely with a signed statement and documentation; or partially agree, accepting what’s right and contesting what isn’t — the most common correct answer.
Two things not to do: don’t ignore it, and don’t just pay it to make it go away — not until someone has checked whether the number is real. And generally, don’t file an amended return for the same items; the IRS wants a response to the notice itself.
If the deadline has already passed, options narrow but rarely to zero — that conversation is more urgent, not hopeless.
You send us the notice and sign a Form 2848 power of attorney. We pull your IRS transcripts to see exactly what was reported and by whom, rebuild the correct numbers with documentation, and file the response — disagreement statement, corrected calculations, basis records, penalty relief request where the facts support one. If the IRS pushes back, we handle the correspondence until it’s resolved.
All of it happens by mail, fax, phone, and secure upload — which is why our CP2000 clients are nationwide, not just in Maryland. Flat fee, quoted in writing after we’ve seen the notice. And if your notice is simply correct and modest, we’ll tell you to just pay it and save the fee — that answer is free. More IRS trouble than one notice? See our full IRS representation practice.
Is a CP2000 a bill or an audit?
Neither. It’s a proposed change from the automated underreporter program. It becomes a bill only if you agree — or fail to respond.
How long do I have?
Generally 30 days from the notice date. After that, the IRS typically issues a Statutory Notice of Deficiency, and your options narrow sharply.
Is the amount correct?
Frequently not — especially where stock or crypto sales are involved, because the computer often taxes full proceeds with zero cost basis. Documentation can shrink the number dramatically, sometimes to zero.
Should I amend my return instead?
Usually no — the IRS asks for a response to the CP2000 itself rather than an amended return for the same items.
Do I need someone local?
No. Everything is handled remotely with the IRS. We represent CP2000 clients in all 50 states under power of attorney.
A quick review tells you whether the number is real — and what responding properly will save. The deadline on your notice is running either way.