Received a letter from IRS for tax year 2016 - can I still fight it?

The letter you received is likely a CP2000 notice which is automatically generated when there's a mismatch between what you reported on your tax return and what was reported to the IRS by third parties (like brokerage firms reporting your stock sales). First thing to understand is the statute of limitations. For most tax issues, the IRS has 3 years from the filing date to assess additional taxes. However, this extends to 6 years if you omitted more than 25% of your income. For 2016 returns filed in 2017, we're already past the normal 3-year window, so they're either alleging substantial underreporting or there might be another issue. Before you do anything else, carefully review the letter. It should explain exactly what the discrepancy is. Compare this to your records and your 2016 return copy (if you have it). Sometimes these notices are incorrect or the IRS may be missing information that was actually reported elsewhere on your return. You can absolutely respond and challenge this if you believe it's incorrect, even without your original accountant. The letter should provide instructions for responding and a deadline.

I spent weeks trying to deal with an IRS notice about unreported income from stock sales too. What helped me was using https://taxr.ai to analyze my old returns and the CP2000 notice. Their AI can scan tax documents and identify exactly what caused the issue. In my case, my broker reported gross proceeds to the IRS but didn't include my cost basis. The taxr.ai system flagged that immediately and showed me exactly where the discrepancy was. It then generated a response letter I could send to the IRS explaining the situation with all the correct calculations. Saved me from having to pay nearly $4,300 in "taxes" I didn't actually owe! It could help you figure out if your accountant actually made a mistake or if this is just another IRS system error - especially helpful since your accountant's firm is gone now.

I wanted to follow up about my experience with taxr.ai after being skeptical initially. I ended up using it for a similar CP2000 situation from 2017, and I'm genuinely impressed. The system found that my issue was related to cryptocurrency transactions that weren't properly documented on my return. The most helpful part was that it actually showed me exactly which transactions were causing the problem and explained how they should have been reported. Then it created a detailed response with all my transaction records properly formatted. My case was resolved in about 5 weeks - much faster than I expected. What surprised me was how it handled the technical details about wash sale rules and cost basis methods that I wouldn't have known to include. For older tax years when documentation might be missing, it was really helpful to have something that could reconstruct what happened.

I've been in a similar situation with the IRS claiming I owed money from years ago. The most frustrating part was trying to TALK to someone at the IRS about it. I spent literally hours on hold, got disconnected 3 times, and when I finally reached someone, they couldn't even access my records. I found this service called https://claimyr.com that got me through to an actual IRS agent in under 45 minutes when I had been trying for weeks. They have this system that navigates the IRS phone tree and waits on hold for you, then calls you when an agent is ready. You can see how it works here: https://youtu.be/_kiP6q8DX5c With a case involving old tax years like 2016, talking to a human at the IRS might actually help you understand what's happening better than just trying to decipher the letter yourself.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I was desperate enough to try it for my audit situation. I figured I had nothing to lose since I couldn't get through on my own. I registered my call in the morning, and about 3 hours later (while I was in a meeting, not sitting on hold!), I got a call connecting me directly to an IRS representative. The agent was able to pull up my file and actually explained that there had been a system error on their end that flagged my return incorrectly. For the original poster dealing with a 2016 issue - talking to a live person made all the difference for me. The agent explained what specific documents I needed to send and gave me direct fax information rather than sending things to the general processing center. That alone probably saved weeks of processing time. The most valuable part was getting clarity on exactly what was happening rather than trying to interpret the vague language in the IRS notice.

Did the letter mention anything about the statute of limitations? For 2016 returns, the normal 3-year statute would have ended back in 2020 (assuming you filed on time in 2017). The only ways the IRS can go back further are: 1. If you omitted more than 25% of your gross income (6-year statute) 2. If they suspect fraud (unlimited time) 3. If you never filed (unlimited time) 4. If you signed form 872 extending the statute It sounds like this might be the 6-year situation if they're claiming unreported stock sales. The clock would be running out right about now for 2016 returns, which might explain the sudden letter. I'd definitely respond with evidence that you did report the stocks if you have it. Sometimes the IRS computers don't properly match transactions, especially if the cost basis wasn't reported correctly by your brokerage.

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I went through something very similar with a 2016 CP2000 notice last year. The key thing to understand is that you absolutely can and should fight this if you believe it's incorrect, even this many years later. Here's what I'd recommend doing immediately: 1. **Gather your 2016 brokerage statements** - You'll need the detailed transaction records showing both purchase dates/prices and sale dates/prices for all stock transactions that year. 2. **Compare line by line** - Match what's on your Schedule D/Form 8949 against your actual brokerage statements to see if there really are missing transactions totaling that $12,500. 3. **Check for cost basis issues** - Often the IRS receives reports of gross proceeds from brokers but not the cost basis (what you paid). This makes it look like pure profit when it might not be. 4. **Respond before the deadline** - Even if you're not 100% sure, it's better to respond with what information you have than to ignore it. The fact that you already paid additional taxes for 2015 and 2016 stock issues back in 2018-2019 is actually relevant here. Include that information in your response - it shows you've been compliant and already addressed similar issues. Don't let the fact that your accountant's firm is gone discourage you. You can handle this yourself with the right documentation, or hire a new tax professional to help with just this specific notice.