IRS Underreporting Notice Help
An IRS underreporting notice (often a CP2000 or similar) indicates the IRS believes you failed to report all income on your tax return based on information statements (W-2s, 1099s, etc.) they received from third parties.
Prepare Your Underreporting Notice Response
Upload your notice for procedurally correct response guidance
Draft My ReplyWhat This Notice Means
An underreporting notice means the IRS has matched income reported to them by employers, banks, and other payers against your tax return and found discrepancies. They are proposing additional tax, interest, and potentially penalties.
Why You Received This Notice
Common reasons for underreporting notices include:
- W-2 or 1099 income not included on your return
- Self-employment income reported to the IRS but not on your return
- Investment income (dividends, interest, capital gains) not reported
- You did not receive a tax form but the payer sent one to the IRS
- Income was reported on the wrong line or form
What NOT to Do
- Do not agree with the proposed changes without verifying each discrepancy
- Do not provide explanations for income from other tax years
- Do not admit to intentionally underreporting income
- Do not send complete bank statements unless specifically required
What to Do Next
- Compare the IRS's information to your tax return line-by-line
- Obtain copies of all W-2s and 1099s for the tax year
- Determine if the income was actually unreported or reported differently
- Prepare a written response addressing each discrepancy
- If income was unreported, file an amended return before responding
Common Underreporting Response Positions
If you agree with the underreporting:
- File an amended return (Form 1040-X) reporting the missing income
- Pay the additional tax owed or request a payment plan
- Request penalty abatement if you have reasonable cause
If you disagree with the underreporting:
- Provide documentation showing the income was reported (on a different line or form)
- Explain why the reported income is incorrect (payer error)
- Show the income is non-taxable or was offset by deductions
Disclaimer: This tool provides informational assistance only and does not constitute legal or tax advice. For complex tax matters, consult a licensed tax professional or attorney.