IRS Saying You Underreported Income? Your Options as a Florida Taxpayer

Getting a notice from the Internal Revenue Service (IRS) saying your income doesn’t match what they have on file is unsettling. Your first reaction might be panic. Your second might be confusion. Either way, it is important to know that this kind of notice is common, and you have real options for responding.

The IRS sends these notices to millions of taxpayers every year, and receiving one does not mean you are being audited or accused of wrongdoing. Our experienced Florida tax and IRS attorney explains what this notice means and what Florida taxpayers can do next.

What the IRS Is Telling You With a CP2000 Notice

When the IRS believes you underreported income, it typically sends what is known as a CP2000 notice. This is an automated letter generated when the income, credits, or deductions on your return do not match records the IRS received from employers, banks, or other third parties.

This notice is not a bill, and it is not a final determination. It is a proposal, and you have the right to respond. Common reasons Florida taxpayers receive a CP2000 include:

• A 1099 was issued in your name that you did not include on your return.
• Proceeds from a stock or investment sale were reported without an offsetting cost basis.
• A corrected W-2 or 1099 arrived after you already filed.
• Freelance or contract income was reported by the payer but omitted from your return.
• Income from interest, dividends, or a side business was not captured in your filing.

You generally have 60 days to respond to a CP2000, but don’t put off dealing with it. If you miss the deadline, the IRS will then issue a formal notice of deficiency, at which point your options narrow considerably.

How Florida Taxpayers Can Respond to an Underreported Income Notice

CP2000 notices often contain errors. Before you do anything, compare it against your own records and pull your IRS wage and income transcript to confirm what the agency actually received. From there, response options include:

• Agreeing with the proposed changes and paying the balance, or setting up a payment plan.
• Disagreeing with the notice in writing and submitting documentation that supports your original return.
• Filing an amended return if your original filing was incomplete.
• Requesting an extension of the response deadline if you need more time.
• Appealing the IRS decision if your written response is rejected and you still believe the proposed adjustment is wrong.

The CP2000 process is part of the Automated Underreporter program, which cross-references millions of returns each year. While the process catches real discrepancies, it also generates errors. Don’t assume the IRS is right just because it sent the notice.

Request a Consultation With Our Experienced Florida Tax and IRS Attorney

If you received a notice regarding underreported income, contact Florida tax and IRS attorney Ronald Cutler right away. A Certified Public Accountant and former FBI Special Agent, Mr. Cutler has more than 50 years of experience helping Florida taxpayers. To protect against penalties, contact our office and request a consultation today.

Sources:

irs.gov/taxtopics/tc652

irs.gov/individuals/understanding-your-cp2000-notice

irs.gov/pub/irs-pdf/p556.pdf