For your information, the IRS (Internal Revenue Service) receives information from financial institutions and employers. Therefore, they will find out if the income you report is accurate or not.
It will not be easy to hide information regarding the money you receive from a company or employer. The IRS uses the AUR (Automated Underreporter) tool. Then, it compares what you report and what banks and employers reported.
If they find that there are different figures, a tax examiner will review your 2023 tax return. As a result of this review, the IRS may discover a discrepancy. Then, they will send you a Notice CP2000.
IS CP2000 A BILL?
The IRS claims that CP2000 is not a bill. Basically, it is just a proposal to adjust your income, deductions, credits, and payments. There is good news because something positive could happen.
Although when you get an Internal Revenue Service notice you immediately think about a penalty or higher tax payments, it is not always the case. Some taxpayers may get a refund of the taxes they paid.
So, it is not always to tell you that there is additional tax owed. Sometimes you do not understand whether you have to pay more taxes or not. In that case, call the Internal Revenue Service to get some support.
WHAT CAN I DO IF I GET AN UNDERREPORTED NOTICE FROM THE IRS?
All you have to do is agree or disagree with the proposal. Taxpayers who agree with the changes the Internal Revenue Service proposed will have to sign, complete, and write the date on the Response form.
Joint filers will have to sigh both of them. Do not forget to send it to the IRS in the enclosed envelope. If you have to pay more taxes, there will be some interest.
Some taxpayers may also have to face penalties due to underreported income. As the interest may increase, the sooner you pay, the better. Visit https://www.irs.gov/taxtopics/tc652 for more information about it.