On Friday, the IRS announced that it discovered an error on CP2000 notices mailed to taxpayers during the weeks of July 1 and July 8. A CP2000 notice, or underreporter inquiry, is sent to taxpayers when there is a discrepancy between the information reported on the taxpayer’s return and the information provided to the IRS by third parties, such as employers, banks and other payers. The CP2000 notice reflects any proposed changes to credits, deductions or payments reported on the tax return. Typically, CP2000 notices propose an increase in taxes, along with penalties and interest. The CP2000 notices sent in the first two weeks of July contained incorrect interest calculations on the proposed increase in taxes from underreported income. The amount of the error varied, but according to the IRS Automated Underreporter Unit, most of the notices showed either no interest or a total of $1 in interest. Currently, the interest rate should be 3% per year of the proposed additional tax. With an average additional tax assessment of $1,711 per CP2000 notice, the average additional interest assessment would be about $70.
Posted on: Wed, 17 Jul 2013 19:23:28 +0000
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