Tag Tiger: Second Round of 2010 Underreporter Notices

Tax Tiger

CP2000 notices have quadrupled in past ten years, Tax Tiger states.

SACRAMENTO, California – May 27, 2012 – The tax resolution professionals at Tax Tiger announce that the second round of IRS underreporter inquiries, or CP2000 notices, has begun. With the April 2011 tax-filing season now past, automated notices from the IRS are expected to be generated for almost 5 million taxpayers. The CP2000 inquiries pertain to potential misreported income and deductions that taxpayers claimed on returns for 2010.

In the past decade, reports Tax Tiger, the number of CP2000 notices sent out by the IRS has quadrupled. CP2000 notices are sent when the IRS believes a taxpayer has underreported income. However, of the approximately 4.7 million notices sent by the IRS in 2011 to taxpayers, one third of the recipients owed no additional money.

Whether or not a taxpayer owes additional tax, Tax Tiger advises responding promptly and truthfully. Failure to respond to a CP2000 notice will receive a notice of deficiency. Because the IRS currently does not have the staff to handle the volume of CP2000 responses coming in, Tax Tiger notes that a taxpayer may receive this notice even if response is timely. But sending your response as quickly as possible, you can avoid receiving one of those disconcerting delinquent notices, according to Tax Tiger.

Taxpayers are selected to receive a CP2000 letter during a process that begins in the summer following tax season, Tax Tiger reports, with the IRS going through tax returns and comparing them to the information the IRS received from employers and other payers. The first round of CP2000 notices is sent at the end of the year, with another round going out in the following spring.

If a taxpayer receives a CP2000 notice, Tax Tiger advises that he or she compose a brief but informative letter that clearly states the case. Because the IRS processes so much correspondence on a daily basis, bulky packets of information and documentation will likely be set aside without being read. Attach to that letter a copy of an amended tax return with the words, “Corrected—for CP2000 response purposes only—do not process.” This will keep the IRS from trying to process the tax return as it would process ordinary tax paperwork, if for some reason it should become separated from the letter. It is also important to attach any supporting documentation.

Typically, Tax Tiger recommends clients do not file a Form 1040X as it can result in delays or additional fees if the IRS misconstrues the form. If, for some reason, a taxpayer should receive a delinquency notice, Tax Tiger advises that he or she petition for a CP2000 reconsideration. A taxpayer may be allowed an appeals hearing if the IRS doesn’t forgive the delinquency.

Tax Tiger is a tax resolution service assisting taxpayers with a wide variety of tax issues. Over the past ten years, the company has helped taxpayers save more than $20 million in back taxes, penalties, and interest. Tax Tiger has become known as a unique tax relief assistance company because the company operates from a faith-based background. The team at Tax Tiger is proud to report the company has a 99 percent rating of customer satisfaction.