I have received a CP2000 notice from the IRS for my 2015 return. The notice states that I didn't report my 1099 from the RRB. What can I do?

[ss4647]

I've just been notified about this, I will amend my return and pay what I owe but don't feel I should be charged a negligence penalty or interest, what do I do?

[SweetieJean]

Why do you think you shouldn't have to pay a penalty or interest?  It was your error in not claiming that income.

[Lisa995]

If they're correct and you failed to include it on the 2015 return, no amendment is necessary.  You would just pay the bill.  The taxes on that money was due back in April 2016, so the taxes are late and penalties and interest will apply.

You could try and request a waiver of some of the penalties, if you had a good reason for not including it on the tax return.

[MrsYarmola]

What if the IRS was wrong? Did you report your 1099 on Turbotax? I have received a total of three CP2000 forms now, and the IRS computer was wrong every time. The first was for 2008; I was frightened and just sent them a check. Two years later they returned my money, saying they found the payment. I know I had paid it in the first place, but didn't have the time or information to fight it. I also received a CP2000 for Tax Year 2014; I researched on the web and found a Forbes magazine article about how these notices are computer-generated, are often incorrect, and how to dispute them. After sending my letter and documentation by fax and trackable mail, I received the response that we owed nothing. I'm hoping for the same result this time for TY 2016, where the CP2000 claimed I didn't report 1099 disability retirement income. I found the worksheet in Turbotax and sent it with a copy of the 1099-R along with the other paperwork. I hope you didn't pay money to the IRS unnecessarily!

[Opus 17 · Accepted solution]

When the IRS finds an income deficiency, they calculate a preliminary tax assessment, but it is not always accurate, because they may not know about deductions or special circumstances. 

I suggest that you prepare an amended return to see if the tax owed that you calculate is the same as the tax owed calculated by the IRS.

If your numbers match, just mail a check.  You don't need to amend, the IRS will adjust your records for you.

If you disagree about the amount of tax owed, mail the amended return, a letter of explanation, and a check for the adjusted amount, to the address from the notice (not the usual amending address).  (Note that if the amount you owe is different, the penalty will be different.  Just pay the tax and let the IRS bill you for the recalculated late fee.)  Amending instructions are below.

You can always ask for mitigation of the penalty, I don't know how often that is granted though.  Unless you had some special circumstance that interfered with reporting the income, you probably owe the penalty.

Amend https://ttlc.intuit.com/replies/3288565

[seaninwa]

Thank you so much for this information. I was astonished when I saw they didn't calculate my standard deduction ($25k) which is clearly on my submitted 1040, as well they left out the  COVID relief deferred amount from 2020 ($30k) then they say og yeah, you owe us $12k for the $60 in income you didn't report. Oh, except you made the mistake not me. We should be able to bill them for our time to correct their wrong decision.

[MrsYarmola]

Aloha, Thank you for your comment! After I learned how CP2000 notices are computer-generated, basically trolling for certain trigger situations or terms, I’ve never sent them additional money. On each occurrence, I sent a “disagree” letter; after a few weeks the IRS says they’ll look at it—then after a few more weeks I’ve received a letter stating that I was right and owe nothing. My review of the tax return, composing a letter, printing attachments—these take up about a working day’s time out of my life.

After the last notice, I sent a paper tax return the next year. Two years ago I stopped using TurboTax and became a client of H&R Block. I don’t blame TurboTax; I’m just weary of dealing with the IRS and their CP2000s, and don’t want to do anything that might set them off again.

contrary to the other comments on this question, I continue to advise people who feel they did not make an error to send no money—mail a letter of disagreement instead!

Thanks again for sharing your experience!