Is the CP2000 form the IRS audit? or is an audit totally something different?

Question

Someone told me that "audits" are usually reserved for those who have very very suspicious income exclusions and are usually for those making at least $35K per year.

Any truth?

Answer 1

A CP2000 is a report of underreported income. It is for any and all people who choose not to report all their income they received during the year. This usually happens when one files their income tax return before receiving all their W2 information from their employees, 1099 from banks etc.

Answer 2

A CP2000 is the result of the IRS having a record of something that was not reported on your tax return and they believe that you would owe more tax had that item been included. When they calculate the effect of such a discovery it is always after assuming the worse case for the tax payer. Frequently CP2000s are easily answered and may result in more money being due to the taxpayer. However they can be from a serious over site and the taxpayer will have a very large tax bill.

On the other hand an audit is a matter of the IRS taking a look at your return and requesting that you prove various aspects of the return if not all of it. Audits can be random but are more often they are triggered by some irregularity. People with simple returns are less likely to be audited because there are fewer things to question.

Answer 3

A CP2000 form isn't an audit, it's a notice that the IRS thinks you owe them money, telling you why, and how much they think you owe. You either pay the amount, or tell them why you don't owe that much. It's sent out if they receive a report of some kind of income that you don't show on your tax return.

Audits don't necessarily imply "very, very suspicious" items on your return - some are just random and the person being audited just was unlucky. But in an audit, you are required to prove something on your return. It doesn't mean that you will owe - as long as you can show that you are entitled to what you claimed, you are OK - and in some cases you can even end up with some extra money back.

Answer 4

A CP2000 is a mismatch form. It's generated by the IRS computer when it can't find reported income on the tax return. Eg, the bank issued a 1099-INT showing $100 in interest and your tax return shows $0.

An audit is when the IRS is seriously questioning the numbers on your return. Either because they look out of whack (huge itemized deductions) or you are in an area with compliance problems (small business).

Often audits start with a letter asking for photocopies. Eg, you ask for a telephone credit far in excess of normal amounts, they'll want to see the actual phone bills. If you send in the photocopies, end of story.

Answer 5

Cp 2000 Audit

Answer 6

It's a baby audit. It indicates you haven't reported something IRS thinks you should based on information returns documents about you it received. I recently had one for a client who failed to report unemployment benefits. If you disagree with the IRS figures and can't come to an agreement, you will receive a Statutory Notice of Deficiency which is your ticket to tax court.