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Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 646
Experience:  Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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I got a CP2000 for underreported income (securities that I

Customer Question

I got a CP2000 for underreported income (securities that I did not report correctly). The IRS charges these taxes without a cost basis. When I put everything together, my taxes owed were about $700 rather than $23,000. It took some time to get all the documents together, but the day I was ready to mail it out, I got a Notice of Deficiency. May I still mail in my CP 2000 correction with the payment, or have things suddenly got much more complicated and now I have to go through a tax court, etc? I just want to mail in my CP 2000, but I'm not sure if they will still accept it. Thanks!
Submitted: 2 years ago.
Category: Tax
Expert:  Phillip B, EA replied 2 years ago.
Thanks for using JustAnswer.com!

I would still send your response to the CP2000 and maintain your documentation. If the IRS makes the proper adjustment from your CP2000 response, then you can simply move on without any additional hassles. However, if the IRS doesn't make the proper adjustment from your CP2000 response, you may want to hire a CPA, EA, or tax attorney to help you. These licensed tax professionals can deal with the IRS in your behalf, and they may be able to help solve your problem more expeditiously.

The notice of deficiency gives you 90 days to file a Tax Court petition. If the matter isn't fixed within the 30 day period prior the 90th day, I would recommend filing the petition. You don't have to hire an attorney to file the petition, you can used this form (http://ustaxcourt.gov/forms/Petition_Kit.pdf) to file the petition on your own behalf. After the petition is filed, the case will go back to IRS appeals. IRS appeals is usually a good place to get issues like this resolved.

If there are other questions or concerns, please reply to this answer so that I may assist you further.

If this answers your question, please rate my performance between OK and Excellent so that I may be paid. Thanks for your business.
Customer: replied 2 years ago.


I am sure they would have accepted the CP 2000 if I had filed it on time. It's a pretty routine issue. But what I'm wondering now is if missing the deadline means they won't accept it as a matter of law. Your answer hints that maybe they will accept it, maybe not?

Expert:  Phillip B, EA replied 2 years ago.
They may be inclined to request substantiation to prove your basis, where they probably would not have if the CP2000 response was filed on time. As long as you can prove the basis, the issue will be resolved in your favor. However, you may need to deal with some additional hassles that you definitely would have avoided it the CP2000 response would have been sent on time.

In the your CP2000 response you may want to include the following:

"Based on the enclosed documentation, we request a audit reconsideration." This is a process in the IRS, and it will help keep the CP2000 reponse in forward progression. Also, send the CP2000 reponse to the address that sent the notice of deficiency.

Let me know if there is anything else that I can do.
Expert:  Phillip B, EA replied 2 years ago.
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Phillip B, EA
Phillip B, EA
Tax Advisor
536 Satisfied Customers
Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.