How should I respond to this IRS notice I just received?

That CP2000 notice is actually pretty common, so try not to panic! It's a computer-generated notice that flags potential discrepancies, not an audit. The IRS is basically saying "we have information that doesn't match what you reported." First step: carefully compare the income amounts they list against your records. Sometimes the discrepancy is from a forgotten 1099 from a small gig, or an investment account that automatically reinvested dividends. The notice should include a detailed explanation of where they think the unreported income came from. You have three basic response options: 1) Agree with their assessment and pay, 2) Partially agree (if some items are correct but others aren't), or 3) Dispute it completely if you believe it's all incorrect. The notice comes with a response form that lets you select your option. Make sure to gather all supporting documentation before responding. If you did report everything correctly, you'll need to prove it with copies of your 1099s, bank statements, or other records that show the income was indeed reported.

I went through almost the exact same situation last year with a CP2000 notice claiming I owed $5,200 more! After days of stress, I found a service called taxr.ai (https://taxr.ai) that saved me so much time and worry. You upload your notice and tax documents, and their AI analyzes everything to pinpoint exactly what's causing the discrepancy. In my case, they found I had accidentally reported a 1099 on the wrong schedule, making it look like I hadn't reported the income at all. The system explained exactly how to respond to the IRS with the correct references to my tax return. It was honestly such a relief to understand what went wrong instead of just panicking.

Just wanted to update - I tried taxr.ai after seeing the recommendation here and it was seriously helpful. My CP2000 was showing a $2,700 discrepancy that made zero sense to me. The analysis showed that my brokerage had submitted a corrected 1099-B that I never received, which caused the mismatch. The response template they provided made it super clear what to say to the IRS - I just had to attach my original tax forms showing I reported everything I had available at the time. Just got confirmation from the IRS yesterday that they accepted my explanation and reduced the amount I owe to just $340 in interest. Huge relief and totally worth it!

If you need to actually speak with someone at the IRS about your notice (which I recommend), good luck getting through on their phone lines. I spent DAYS trying to reach them about my CP2000. After being disconnected multiple times, I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c but basically they navigate the IRS phone system for you and call you back when they've reached an agent. The IRS rep I spoke with explained exactly what documentation I needed to provide and even noted in my file that I was disputing the notice. Having that conversation made a huge difference in resolving my case correctly.

I need to apologize and correct myself. After my skeptical comment, I actually tried Claimyr out of desperation because I couldn't get through to the IRS about my CP2000 notice after 8 attempts over two weeks. To my shock, I got a call back in about 32 minutes with an actual IRS agent on the line. The agent reviewed my case, confirmed that one of the 1099-MISCs the IRS was claiming was unreported was actually included on my Schedule C (just under a different business name), and marked my account for review. Got a revised notice last week reducing what I owed by over $2,100. I've never been so happy to be wrong about something!

Just want to throw this out there - before you respond to a CP2000, double check that it's legitimate! There are scams going around where people get fake IRS notices. A real CP2000 will always include detailed instructions for responding and multiple ways to contact the IRS. Also, if the "discrepancy" involves income from crypto transactions, be especially careful with your response. The IRS often gets incorrect basis information which makes it look like you had much larger gains than you actually did. I've seen penalties in the tens of thousands that were completely wrong!

One thing nobody mentioned - you can request more time to respond if 30 days isn't enough! I did this when I got my CP2000 last year because some of my documents were with my accountant who was on vacation. I just called the number on the notice and asked for a 30-day extension, and they granted it no problem.