Taxpayer Didn't Respond to CP2000 - What Now?

[JohnH]

Taxpayer received a CP2000 in Aug 2009 for her 2007 return. She tried to handle it herself and then received another CP2000 in November, 2009. She didn't do anything about it at all, and she eventually received a final notice of about $2,200. She arranged to begin payments in Jan 2011.

Then she brought it all to me asking if there's anything else to be done. I think the CP2000 was wrong, and she just didn't know how to respond to it correctly. I usually send this sort of thing away, but it's a personal friend so I thought I'd look into it. At this point can she file an amended return? Or is there any other way to handle it?

[JG EA]

Taxpayer received a CP2000 in Aug 2009 for her 2007 return. She tried to handle it herself and then received another CP2000 in November, 2009. She didn't do anything about it at all, and she eventually received a final notice of about $2,200. She arranged to begin payments in Jan 2011.

Then she brought it all to me asking if there's anything else to be done. I think the CP2000 was wrong, and she just didn't know how to respond to it correctly. I usually send this sort of thing away, but it's a personal friend so I thought I'd look into it. At this point can she file an amended return? Or is there any other way to handle it?

If the CP has been responded to by her then yes you can amend now.

I would call TPH and see where the whole thing is at this time. Tell them an amended is coming. That way if she owes money they can extend the time limit to cover the time to do the amended.

[S T]

I had one of these

Several years ago, I received a "Urgent Help" message from one of my clients that did not respond to a CP2000 notice. I gathered all of the info and contacted the number on the latest notice (under POA)- and they allowed us to submit the required information and then after several months, all was resolved.

Sandy

[OtisMozzetti]

Several years ago, I received a "Urgent Help" message from one of my clients that did not respond to a CP2000 notice. I gathered all of the info and contacted the number on the latest notice (under POA)- and they allowed us to submit the required information and then after several months, all was resolved.

Sandy

I guess that the CP2000 is one form of audit by IRS. If the taxpayer did not respond, then my understanding is that it is possible to request "audit reconsideration". I do not have any really good gauge about whether or not audit reconsideration is likely to be granted. I would think that the office which issued the CP2000 to begin with is the place to start with the request.

Despite the existence of audit reconsideration, it also does seem to me that there is and should be some policy that failure to respond means something similar to "you owe, and that's too bad".

[JohnH]

Thanks everyone.
I think the "audit reconsideration" is the most productive route to go.

As accountants & tax preparers, we do like to see things wrapped up neatly and time limits placed on events, but things happen in people's lives that cause them to put off the important because there's something in the moment that demands their undivided attention. Spouses get ill, family members die, teenagers get pregnant, jobs become insecure, the list is endless. The simple fact is that the "tyrrany of the urgent" sometimes forces people to put off things they should be paying attention to. Add to that the fact that a CP2000 is not exaclty the model of easliy understandable info and you have a prescription for problems. Thank God for second chances.

[DaveO]

I get at least one or two of these a year. I have always been successful with either audit reconsideration or a collection due process or equivalent hearing. Start with the office that issued the CP2000. If a notice of deficiency has been issued the clock is ticking as far as a petition to tax court. However unless there is a point of law in dispute a trip to tax court will be a waste of money.

I don’t judge my clients when they come in with these messes. I wasn’t there to experience the circumstances that caused their problem. I just try to help them to the best possible outcome.

[appelman]

Something about these notices addles peoples brains...

and often creates total paralysis. My experience is that the examiners are usually just waiting for responsible adult supervision to appear on the scene. Once you have a POA in place and can clarify the situation, I've always found them very cooperative and accommodating. And they usually aren't sticklers for formality regarding how to go about things.

[joanmcq]

I've used audit recon sucessfully in these types of situations as well. Audit recon is for when either no info was submitted or there is additional info that needs to be submitted for the issue at hand (or the auditor refused to look at the info submitted, but that is another story).

[Edsel]

John is Generous

but things happen in people's lives that cause them to put off the important because there's something in the moment that demands their undivided attention.

Although John's statement is true, I do believe he is being either diplomatic or overly generous. Most of these "things" happen to everyone to some extent, and 95% of the "things" that happen to some clients fall into the category of "I don't wanna fool with it."

Indeed, John has listed some serious things that can preclude one from concentrating on important mail -- there is illness, death, relocation, pregnancy and these things can occur suddenly and without warning. But if your clients bring you 15 of these CP2000 or other notices, here is a typical breakout:

8-9 notices -- IRS screwups, either in part or in whole.
2-3 notices -- Client has received a 1099 and has inadvertently failed to let you see it.
2-3 notices -- Client has received a 1099 and ignored it because he thought it didn't matter.
2-3 notices -- Client doesn't want to fool with it so has totally ignored it.

Out of 15 such notices, maybe only a couple of them will be to such dire circumstances as John mentioned. And of course, there will also be a couple of them that will frantically call you and think they are going to the electric chair...

[JohnH]

Yes, I probably was being generous. I'd be mostly in agreement with the breakdown Ron posted. Nice thing about the ones who think they're going to the electric chair - if you can fix the probelm for them, they generally don't complain about the bill.