CP2000 Questionnaire

[Snaggletooth]

One of our most beloved documents, the beloved CP2000.

The "real" explanation of the problem begins on page 7. The first six pages are dedicated to what IRS describes as a step-by-step questionnaire, -- if you agree answer these questions, check all boxes that apply, sign and incriminate yourself, if you don't agree, skip this, blah...blah...

How many of you have clients who have the presence of mind to fill this out?

[Burke]

Hopefully, none. I don't want them to even attempt it. Half are wrong anyway, I've got one here I need to deal with after tax season where they disallowed the MWP (or a part of it anyway) for no reason. I can't even figure out how they came up with the amt, but the TP got the letter saying they had to pay back $189 and they DID. So now I have to get it back.

[rjholmes]

Hopefully, none. I don't want them to even attempt it. Half are wrong anyway, I've got one here I need to deal with after tax season where they disallowed the MWP (or a part of it anyway) for no reason. I can't even figure out how they came up with the amt, but the TP got the letter saying they had to pay back $189 and they DID. So now I have to get it back.

Yeah, and last year many people got back more MWP than they should. At least they are keeping tax preparers in business.

[Golden Rocket]

Clients Notwithstanding

How many of you have clients who have the presence of mind to fill this out?

Forget the clients. How many of US have the presence of mind to fill this out?

[DaveO]

I have it on very good authority that most CP2000 notices are wrong and that a taxpayer should never agree to changes or sign any part of the document including the authorization part.

Use a 2848 if need be and start your letter with "I disagree with the proposed changes" and end it with "If this infomration is not sufficient to settle this issue in the taxpayer's favor in accordance with the documentation provided please consider this letter a formal request for transfer to appeals for further review"

It's very easy for the taxpayers appeals rights to expire.

[taxea]

I have it on very good authority that most CP2000 notices are wrong and that a taxpayer should never agree to changes or sign any part of the document including the authorization part.

Use a 2848 if need be and start your letter with "I disagree with the proposed changes" and end it with "If this infomration is not sufficient to settle this issue in the taxpayer's favor in accordance with the documentation provided please consider this letter a formal request for transfer to appeals for further review"

It's very easy for the taxpayers appeals rights to expire.

Of course they are! They are computer generated and if the program is not written in a specifically adequate manner then it is like any other data...garbage in, garbage out
(The garbage out is the CP2000).

At least we didn't get them during the tax season. The IRS must have heard our outcry of IRE last year.

[dyne]

If IRS does not correct the matter we should THREATEN to contact our CONGRESSMEN and DO SO if necessary. THAT gets action often when nothing else will.

[taxea]

If IRS does not correct the matter we should THREATEN to contact our CONGRESSMEN and DO SO if necessary. THAT gets action often when nothing else will.

Technically it is Congress who creates the mess and the IRS that gets blamed.

[Gary2]

If IRS does not correct the matter we should THREATEN to contact our CONGRESSMEN and DO SO if necessary. THAT gets action often when nothing else will.

What do you expect Congress to do? Appropriate more money for software development? Or cancel the CP2000 program entirely? Either one seems unlikely.

Many of the CP2000s that I see are both appropriate and wrong. They're appropriate because the information was misreported originally, but wrong because the conclusion about taxes owed is wrong. An obvious example are employees who didn't report the sale of their stock award because they were told the taxes were already paid. Or pensions put onto the IRA line or vice versa.

Only rarely have I seen a CP2000 that makes me shake my head and wonder why the IRS sent it. I'll see more where it's absolutely correct. But the plurality, if not the majority, are justified in spite of the wrong bottom line. I do wish they used less paper, but that's a different issue.

[Jesse]

What do you expect Congress to do? Appropriate more money for software development? Or cancel the CP2000 program entirely? Either one seems unlikely.

Many of the CP2000s that I see are both appropriate and wrong. They're appropriate because the information was misreported originally, but wrong because the conclusion about taxes owed is wrong. An obvious example are employees who didn't report the sale of their stock award because they were told the taxes were already paid. Or pensions put onto the IRA line or vice versa.

Only rarely have I seen a CP2000 that makes me shake my head and wonder why the IRS sent it. I'll see more where it's absolutely correct. But the plurality, if not the majority, are justified in spite of the wrong bottom line. I do wish they used less paper, but that's a different issue.

100% in agreement with you Gary!

[joanmcq]

I've seen plenty that are correct in some manner as well. A lot of the stock generated ones should go away with the new reporting requirements for basis. But forgetting a W-2 or 1099s...sometimes I can mitigate it somewhat, like if a W-2 was missed, but they itemize, maybe the state income tax deduction could offset some of the tax due (state info is NOT on the W-2s the IRS gets). Of course a lot of the ones I've seen were generated by self-prepared returns: IRA withdrawals reported as stock sales, the two 1098s reported everywhere TT asks for mortgage income (Sch E, Sch C, Sch A, 8829) quadrupling a deduction, etc. , or retirement distributions where there is zero taxable because there was nothing in box 2a (taxable amount not determined) or UNKNOWN on the ones from OPM.

Gotta catch the mistakes somehow.

[Gary2]

I've seen plenty that are correct in some manner as well. A lot of the stock generated ones should go away with the new reporting requirements for basis.

I wonder how long it will take the IRS to update the AUR system to ignore missing stock sales when the basis shows that the income was negligible.

I think the new forms 3921 and 3922 will do more to make these go away. Most of the stock generated ones that I see are because "My employer told me that the taxes were already paid."