Consider how you’ll pay for this amount and whether you can pay it all at once or need to apply for an installment arrangement. Know that you may also owe a penalty for underreporting your income. You may start to build interest on your balance otherwise, which you want to avoid if possible. It is critical not to ignore an underreporter notice if you receive one. The notice typically includes a deadline to respond, and it’s essential to reply quickly to avoid further penalties.
The IRS is already aware of your tax return and potential issues if they are sending you a CP2000 Notice. Never make things worse by trying to lie to the IRS. You always need to be honest, thorough, and timely when you respond.
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The IRS is merely notifying you that the information did not match. The notice doesn’t necessarily mean that the IRS is trying to fine you with penalties. It’s when you ignore a CP2000 the IRS penalizes you for willful disregard of underreporting.
The AUR is a powerful tool capable of reviewing a wide swath of returns. When preparing your return, double-check for errors, recheck schedules, and be sure you can accurately document the numbers you are claiming on your return—without waiting for the IRS to do it for you. The IRS will mail a CP2000 to taxpayers who have been flagged by the AUR system. The IRS software isn’t sophisticated enough to pick up all the information on attached schedules, Stevenson says. In that case, you have to send in the same information you handed in in the first place with a letter of explanation.
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Each year through this initiative, the IRS matches information returns, such as Forms W-2, 1099 and K-1, with the related Form 1040. Yes, if the Employer Identification Number (EIN) and name control do not match at the subsidiary level, the e-filed return will NOT reject. However, the subsidiary information is used to post an indicator on the subsidiary account that a separate filing is not required. If there is a aur control number irs mismatch, and the mismatch cannot be resolved by IRS, you may receive correspondence. A name control is a sequence of characters derived from a taxpayer’s name that is used by IRS in processing the tax return filed by the taxpayer. It is important that the combination of name control and taxpayer identification number (TIN) provided on an electronically filed return match IRS’s record of name controls and TINs.
Respond to the notice in writing and include supporting documentation to argue against the discrepancies as highlighted on the notice. This may include your W-2 or 1099s, or other missing forms that prove your calculations are correct. Keep copies of all documents you submitted to the IRS, including written responses, supporting documentation, and any other communication. To address this issue, there has been an increase in IRS activity involving the Automated Underreporter (AUR) Program, or more commonly known as the return matching program.