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

I just got this letter from the IRS this week about my 2016 taxes. I'm freaking out because it's been so long! Is there anything I can do at this point?? So back in 2016, I hired this accountant who seemed really knowledgeable. I gave him literally EVERYTHING - all my documents, statements, receipts, the works. He filed everything for me and I thought we were good. Then in like 2017-2018, I got letters from the IRS for both 2015 and 2016 saying there were corrections needed because of some stocks I sold. I remember I had to pay some extra fees at that time which sucked but I paid them. But now, years later, I get THIS letter?? The worst part is that the accounting firm isn't even in business anymore! They closed shop sometime last year so I can't even go back to them to fix whatever they messed up. What's going on here? Did my accountant completely botch my returns? Am I going to have to pay a bunch more money now? How do I even handle a letter for a tax year from so long ago? Any advice would be seriously appreciated!

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19 comments

AstroAce

•8M

The IRS typically has 3 years from the filing date to audit your return, but this extends to 6 years if they believe there's a substantial underreporting of income (like missing stock sales), and there's no time limit for fraud cases. Since you mentioned receiving previous notices about stock sales for 2015-2016 that you responded to, this new letter could be several things: 1) A follow-up to your previous corrections, 2) An entirely new issue they discovered, or 3) A collections notice for amounts previously assessed that weren't fully paid. First, carefully read what the letter is actually requesting. The letter should have a notice number (CP#### or Letter ####) in the upper right corner which tells you exactly what type of notice it is. Also check if there's a deadline to respond. Even though your accountant is out of business, you're still responsible for your tax filings. I'd recommend gathering all your records from 2016 (especially related to stock transactions), your original tax return, and the previous IRS correspondence before deciding next steps.

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AstroAce

•8M

A CP2000 is a notice of proposed changes, not a final bill. This means you have the opportunity to agree or disagree with their findings. The IRS may have received additional information about your stock sales that wasn't addressed in your previous corrections. You can absolutely handle this yourself without an attorney. First, compare this CP2000 with any previous notices to see if they're addressing the same stock sales or different ones. If you still have your records from those stock sales, verify if the cost basis (what you paid for the stocks) is being properly reported to the IRS. Often, the IRS receives information about sales but not the purchase price, making it appear like all proceeds were profit. Contact the IRS at the number on your notice and request an extension of time to respond if needed. Then prepare a clear, written response either agreeing with their assessment (if accurate) or providing documentation showing why their calculation is incorrect. Include copies (never originals) of supporting documents like brokerage statements showing your cost basis.

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Diego Rojas

•8M

After dealing with a similar situation with unreported stock sales, I found this service called taxr.ai that literally saved me thousands. My broker hadn't reported my cost basis correctly to the IRS (super common problem), so the IRS thought my entire stock sale was profit when I actually had a much smaller gain. I uploaded my CP2000 notice and investment statements to https://taxr.ai and their AI analyzed everything, found where the IRS calculations were wrong, and drafted a response letter with all the right documentation attached. The whole process took like 30 minutes instead of the hours I spent trying to figure it out myself the first time. The best part was they found some deductions my original accountant missed too! Definitely worth checking out since you're dealing with stock reporting issues and your accountant is gone.

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Diego Rojas

•8M

The AI does the initial analysis and document preparation, but they also have tax experts who review everything before it's finalized. It's not just a robot sending letters to the IRS! They actually pointed out some errors in my documentation I would have missed. For accessing old statements, that's actually something they helped with too. They provided templates for requesting archived records from brokers, even ones that have been acquired. They also showed me how to use the IRS transcript service to get copies of information returns (like 1099-B forms) the IRS already has on file for you, which can be super helpful when you're missing documents from years ago.

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Sean O'Donnell

•8M

I just wanted to update everyone - I took the advice about trying taxr.ai and it was seriously helpful! I was super skeptical at first (especially about uploading my tax docs to some random site), but after researching them I decided to give it a shot since I was desperate. The system identified exactly what happened with my CP2000 notice - turns out my old accountant reported my stock sales but completely messed up the cost basis. The IRS was treating the entire $23,500 in stock sales as pure profit when I actually only made about $3,200 in gains. The service drafted a response letter with all the correct calculations and told me exactly which documents to attach as proof. They even found a small deduction my accountant missed related to investment fees I paid that year. I sent in their response package about 3 weeks ago and just got confirmation from the IRS that they've accepted my explanation and reduced what I owe from $4,200 to just $750! Such a relief after stressing about this for weeks.

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Zara Ahmed

•8M

If you need to actually talk to someone at the IRS about this (which I'd recommend), good luck getting through their phone system. I spent HOURS trying to reach a human when I had a similar CP2000 situation. After three days of trying, I used this service called Claimyr (https://claimyr.com) that somehow gets you through the IRS phone queue. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c It was the only way I could actually speak to someone to get my situation resolved. The IRS agent was able to look at my previous correspondence and explain exactly what was happening with the new notice. Totally worth it instead of waiting on hold for 3+ hours or getting disconnected.

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Zara Ahmed

•8M

It's actually pretty straightforward - they use an automated system that continuously calls the IRS using their phone lines until they get through, then they connect that open line to your phone. They don't access any of your personal information or talk to the IRS for you. The reason it works is because most people give up after being on hold for an hour or getting disconnected, but their system doesn't. It's basically just doing the tedious work of repeatedly calling and navigating the initial phone tree until a spot opens up. Once you're connected, it's just you talking directly to the IRS - Claimyr isn't on the call at all.

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Luca Esposito

•8M

I take back what I said about Claimyr. After spending FIVE HOURS on hold with the IRS yesterday only to get disconnected, I was desperate enough to try it this morning. I was super skeptical (still am about most "tax help" services), but I got connected to an actual IRS agent in about 25 minutes. The agent was able to pull up my account and explain exactly what was happening with a similar notice I received. Turns out there was a processing error where they didn't properly record my previous payment, so the system automatically generated a new notice. The agent put notes on my account and is sending me confirmation that the issue is resolved. Would I have eventually gotten through on my own? Maybe, after several more attempts and hours of waiting. But with the response deadline coming up, I couldn't afford to wait. Sometimes you gotta admit when you're wrong, and this service actually delivered what it promised.

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Nia Thompson

•8M

One thing nobody's mentioned - if your accountant really did mess up your taxes, you might want to look into filing a complaint with your state's board of accountancy, especially if they were a CPA. Even though they're out of business now, it could help if there's any future issues related to their work. Also, I'd recommend getting your tax transcripts directly from the IRS for 2015-2016. Go to IRS.gov and search for "Get Transcript" - you can see exactly what the IRS has on file for those years, including any payments you've already made. This will help you figure out if you've already paid what they're asking for now.

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Nia Thompson

•8M

You should be able to access your transcripts immediately if you set up online access. If you requested them by mail, it typically takes 5-10 business days. The transcripts will show all reported income, your filed return details, and any payments or credits applied to your account. Filing a complaint against the accountant probably won't directly help with your current IRS issue. The IRS generally holds taxpayers responsible for their returns regardless of who prepared them. However, if there were truly egregious errors or misconduct, documenting it officially could potentially help if you need to request penalty abatement based on reasonable cause. It's also just good for consumer protection so others don't experience similar problems.

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