Income Discrepancy Notice
60 days to respond before the IRS escalates to a CP2000 notice with a proposed tax adjustment.
The IRS found income reported to them by third parties such as employers, banks, and brokerages that does not appear on your tax return. Unlike CP2000, this notice is asking you to explain the discrepancy rather than immediately proposing an adjustment. It is an information request before they calculate what you might owe.
The IRS will issue a CP2000 notice proposing additional tax based on the unreported income, and the full collection process follows.
Gather all your 1099s, W-2s, and any income documents for the tax year in question
Match what the IRS says was reported against your own records
If the income was correctly reported but in a different form, explain this clearly in your response
If income was genuinely omitted, filing an amended return with the income included often reduces penalties compared to waiting for the IRS to assess
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