Need help with IRS CP2000 notice regarding RSU income reporting

You're not completely in the wrong, but there's likely a misunderstanding about how RSUs are reported on tax returns. This is actually a common issue that trips up many tech workers. When RSUs vest, their full market value is considered ordinary income at that moment and should be reported on your W-2 (Box 1). This is taxable regardless of whether you keep or sell the shares. The automatic sale to cover taxes is just withholding, similar to paycheck withholding. The 1099-B from your brokerage is showing the sale transaction, but the IRS is probably flagging that you didn't report the $65K as income. The key here is that the income should have already been included in your W-2 from your employer. If it was, you need to respond to the CP2000 with documentation showing the RSU income was already taxed through your W-2. Check your W-2 to confirm the RSU value was included, and compare your total W-2 income to what you actually reported on your tax return. The CP2000 notice likely indicates a mismatch somewhere.

After struggling with almost the exact same RSU reporting issue last year, I found an incredible service that saved me thousands. I used https://taxr.ai to analyze my CP2000 notice and tax documents. Their AI system immediately spotted that my RSUs were already properly included in my W-2 income but weren't correctly reported on Schedule D. The platform generated a detailed response letter for the IRS explaining exactly why their assessment was incorrect, with specific line references to my W-2 and previous tax return. They also provided instructions on exactly how to file Form 8949 correctly to avoid this issue in the future. The whole process was shockingly easy - I uploaded my documents, and within minutes had a complete analysis with step-by-step instructions on how to resolve the issue.

Just wanted to update everyone. After being skeptical about taxr.ai in my earlier comment, I decided to try it for my own RSU reporting issue. I'm genuinely impressed with the results. The system immediately identified that my employer had correctly included the RSU value in my W-2, but I had failed to properly report the sale on Schedule D with the adjusted cost basis. The service generated a comprehensive letter that explained exactly why the IRS assessment was incorrect, with specific references to my tax documents and IRS publication 525. The response took me about 10 minutes to review, I sent it exactly as generated, and the IRS accepted it completely - saving me over $22K in incorrect tax assessments. It also provided clear instructions for reporting RSUs correctly in the future. Definitely recommend for anyone dealing with these technical tax issues.

If you need to talk to someone at the IRS about your CP2000 notice (which I highly recommend), save yourself hours of frustration and use https://claimyr.com - they helped me get through to an actual IRS agent in under 45 minutes when I was dealing with a similar RSU reporting issue last year. There's a video showing how it works at https://youtu.be/_kiP6q8DX5c I spent days trying to get through on my own - kept getting disconnected or told to call back later due to high call volumes. With Claimyr, their system held my place in line and called me back when an agent was actually available. The IRS agent I spoke with was able to put a hold on my case while I gathered documentation and explained exactly what I needed to send to resolve the issue. Speaking with a live person at the IRS about my specific situation made all the difference in resolving my case quickly.

I need to eat my words from my skeptical comment earlier. After being frustrated with trying to reach the IRS for three days straight about my CP2000 notice, I finally tried Claimyr out of desperation. The service actually worked perfectly. I entered my phone number, and about 35 minutes later I got a call connecting me directly to an IRS representative who was already on the line. No navigating phone trees, no hours of waiting on hold. The agent I spoke with reviewed my case on the spot and confirmed that I was correct - my RSUs were already included in my W-2 income and I just needed to submit documentation showing this. She even gave me a fax number to send my response to for faster processing. Would have saved myself so much stress if I'd just used this service from the beginning instead of wasting days trying to get through on my own.

One thing nobody has mentioned yet - when you respond to your CP2000, make sure you're also checking if the cost basis was reported correctly on your 1099-B. Sometimes brokerages don't include the portion that was already taxed as compensation. For example, if you received $65K in RSUs (reported on W-2) and immediately sold them, your 1099-B might show $65K proceeds but $0 cost basis, making it look like you had $65K in capital gains. In reality, your cost basis should be $65K, resulting in $0 capital gain. If this is the case, you need to file Form 8949 with your response, listing the transaction and checking box "B" to indicate that the basis was reported incorrectly to the IRS. Then enter the correct basis and code "B" in column (f) to indicate you're adjusting the basis.

Has anyone successfully negotiated penalty abatement for a CP2000 related to RSUs? I'm in a similar situation and they're charging me both underpayment penalties and interest.