What You Should Know About the IRS Automated Underreporter

The Screening phase of the Underreporter Program is also referred to as Case Analysis and Analysis. Recomputed Notice (Recomp) – Notice in which the original CP 2000 figures were changed due to a taxpayer response. Case Analysis – The technical review of computer identified discrepancies compared to the tax return. The phase of the Underreporter Program is referred to as either Screening or Analysis. Centralized Authorized File (CAF) – Houses Powers of Attorney (POA) and other authorized disclosure contacts for taxpayer accounts. If you used a tax preparer, they may be able to give you a copy of your return.

In some cases, a CP2000 notice may show that changes after an AUR review resulted in a refund or an increase in the refund amount. In other cases, errors detected by the AUR system could mean a taxpayer owes taxes or owes more taxes than they initially paid when they filed the original federal tax return. 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.

Titles of Forms

AUR detects discrepancies for income, deductions, and credits. If a taxpayer owes money to the IRS or is eligible for a refund after AUR corrects errors, the IRS will send a Notice CP2000. The AUR unit is an essential tool for the IRS to ensure all taxpayers are paying their fair share of taxes. The tool identifies discrepancies and holds taxpayers accountable so the IRS is able to reduce the tax gap, which ultimately benefits everyone.

• We require both spouses’ signatures if you filed married filing jointly.
• An Underreporter Statutory Notice consists of a CP 3219A, Form 5564, a partial reprint of the most recent CP 2000 and Pub 1.
• The overall audit process is intended to catch errors on returns and to monitor for potential tax fraud arising from false income tax returns.
• The AUR is a powerful tool capable of reviewing a wide swath of returns.
• Ensure you respond to the notice timely even if you pay online or set up a payment plan.
• The IRS AUR department helps level the playing field for honest taxpayers, who may feel disadvantaged when others underreport their income.

Finally, if you think a third party submitted incorrect income information to the IRS, you can contact the third party and attempt to resolve the error with them. It’s important to note that the review can be fairly comprehensive. Tax deductions on your return will also be evaluated by the IRS in these cases, for example. Below are various aur control number irs CP2000 response letter samples that we have submitted to the IRS Automated Underreporter (AUR) Unit. My account balance is zero online as it is still a proposal and I can challenge it. Common digital assets include convertible virtual currency and virtual currency and cryptocurrency, Stablecoins, and Non-fungible tokens (NFTs).

Stopping Notices

Therefore, the taxpayer’s basis in the $50,182 of USDC disposed is likewise $50,182 and therefore the increase in the taxpayer’s income with respect to these disposals should be zero. Undeliverable – Correspondence returned from the Post Office that the taxpayer did not receive. Research – Request for additional information (returns, IDRS research, information return files, etc.) needed to continue case processing. The IRS software isn’t sophisticated enough to pick up all the information on attached schedules, Stevenson says.

You may owe additional tax if the AUR unit was correct in finding the discrepancy. 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. IRS data shows that only about 85% of taxes are paid on time and voluntarily.

Part 4. Examining Process

You can usually either fax or mail your response to the address provided on the notice. 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. As the name implies, the AUR is a partially automated process whereby your tax return is matched against information returns gathered by the IRS. Information returns and schedules available to the IRS are extensive, including much more than just W-2 and 1099 forms.

If you agree with our notice, follow the instructions to sign and return the response form in the envelope provided or fax it to the number shown on the notice. We require both spouses’ signatures if you filed married filing jointly. The IRS gives you only 30 days from the date of the letter (not the date you receive it) to return your response (this does not mean putting it in the mail; it means getting it delivered to the IRS).