• The IRS CP 2000 notice alerts taxpayers to discrepancies between reported income and third-party records.
• Common triggers include unreported stock sales, missed 1099s, or incomplete home sale documentation.
• Ignoring a CP 2000 notice can lead to costly penalties, interest, and increased tax liability.
• Responding with proper documentation, like cost basis or eligible deductions, can reduce or eliminate the proposed tax increase.

The IRS has recently ramped up its issuance of CP 2000 notices, causing concern for many. This wave has left many taxpayers confused and stressed, especially when they receive unexpected letters informing them of discrepancies in their tax returns. Understanding these notices is crucial for avoiding costly penalties and interest, so let’s break down what they are, why they happen, and how to respond effectively.…