What the notice means
The CP2000 is a proposal, not an assessment. IRM 4.19.3.21.2 describes it this way: “The CP 2000 is sent to the taxpayer to propose a change to income tax liability because of income that isn't identified or doesn't appear to be fully reported on the tax return.” The same section adds that it is also sent for differences in withholding, the earned income credit, the additional child tax credit or excess Social Security tax. The IRS page for the notice says the difference “may increase or decrease your tax or may not change it at all.”
The notice usually carries proposed interest and, where it applies, a proposed accuracy-related penalty. Under IRM 4.19.3.19.5 the substantial understatement penalty applies when the understatement exceeds the greater of 10 percent of the correct tax or $5,000, at 20 percent of the related underpayment. See the accuracy-related penalty for defenses.
The penalty on a CP2000 is computer-generated, and that matters for the supervisory approval defense under IRC 6751(b). In Walquist v. Commissioner, 152 T.C. No. 3 (2019), the Tax Court held that a substantial understatement penalty determined by an IRS computer program without human review is a penalty “automatically calculated through electronic means” under IRC 6751(b)(2)(B) and so is exempt from the written supervisory approval requirement of IRC 6751(b)(1). The case arose from the Automated Correspondence Exam program rather than AUR, but the court noted that the IRM takes the same position for penalties calculated through the Automated Underreporter program. AUR's own rule is in IRM 4.19.3.23.1.4: the system electronically calculates the accuracy-related penalty, and “If the taxpayer doesn't provide a written response that challenges the proposed penalty or the amount of tax to which the penalty relates, the penalty may be assessed without written managerial approval.” Once a written response does challenge the penalty or the tax it rests on, “managerial approval is needed at the time the tax examiner determines to continue processing the case”; the examiner refers the case to the manager, who records approval in a standard case note, and “Only a manager is authorized to approve the penalty assertion.” The practical point is that a written, signed challenge to the penalty converts an exempt systemic penalty into one that needs documented approval before the CP3219A, and a missing approval is a defense if the case reaches Tax Court. See supervisory approval under IRC 6751(b).
The CP2000 comes in lettered versions. IRM 4.19.3.21.2 defines them:
| Notice | When AUR issues it |
|---|---|
| CP2000 | First proposal, balance due or refund |
| CP2000A | Recomputed after a reply to a CP2501 or CP2000; the taxpayer still has to agree |
| CP2000B | Issued after a CP2501 that got no reply |
| CP2000C | Partly agreed: AUR accepts a reply to a lower amount, assesses and closes |
| CP2000D | Recomputed after the CP3219A was issued, while there is still time to petition |
| CP2000E | Partly agreed after the time to petition the Tax Court has expired |
Why the client got it
AUR is a matching program. IRM 4.19.3.1.1: “Potential AUR cases are systemically identified through computer matching of tax returns with corresponding Information Returns Master File (IRMF) payer information documents.” A tax examiner then reviews each selected case before a notice goes out. The underlying documents are the Forms W-2, 1099, 1098, SSA-1099 and similar returns payers file. Common triggers are an omitted 1099-NEC or 1099-K, brokerage sales reported without basis, retirement distributions treated as rollovers without support, and income reported on a different line or schedule than the IRS expected.
When the information return itself is wrong, the fix often starts with the payer. A corrected form from the payer is strong support for the reply; payers handle that through the information return correction process.
When the client never earned the income at all, the CP2000 may be the first sign that someone else used the SSN. AUR treats a claim of identity theft as a referral case. Under IRM 4.19.3.23.1.25, a claim is identified by a Form 14039, Identity Theft Affidavit, a police or law enforcement incident report, or key words in the response, and “All cases with a Form 14039, Identity Theft Affidavit, and/or a police/law enforcement incident report received in AUR will be referred to the IDTVA by the AUR IDT Liaison.” The Identity Theft Victims Assistance unit makes the account determination and the case comes back to AUR for closure. Form 14039 (Rev. 2-2026) has a box in Section A for a form submitted in response to an IRS notice, and its instructions say to return the form with a copy of the notice to the address or fax number on the notice rather than to the general identity theft address. If the statute is within 90 days when the claim comes in and no statutory notice has issued, IRM 4.19.3.23.1.25.4 has AUR send Letter 1802-C saying the claim is being referred and that a notice of deficiency will still issue; the petition period then has to be protected while the referral is worked.
Deadlines and what happens if they pass
| Clock | Length | Source |
|---|---|---|
| Reply to the CP2000 | Due date printed on page 1, which is 30 days from the notice issuance date | IRM 4.19.3.23.2.5 |
| Phone extension before the due date | An additional 30 days | IRM 4.19.3.23.2.5 |
| Written extension request | Granted by Letter 2626-C; a second one only with extenuating circumstances | IRM 4.19.3.23.9.3 |
| Reply to an AUR letter (such as Letter 2626-C) | 30 days from the letter date; 45 days for a foreign address | IRM 4.19.3.23.10 |
| AUR's reply to a response | Within 30 calendar days of the IRS received date, or an interim Letter 4314-C by the 30th day | IRM 4.19.3.23.1.5 |
| Tax Court petition after the CP3219A | 90 days, or 150 days if addressed outside the U.S.; cannot be extended | IRC 6213(a); IRM 4.19.3.2.1.1 |
For extensions, AUR staff are told not to “grant a subsequent extension, unless extenuating circumstances apply” (IRM 4.19.3.23.9.3). If there is no reply, IRM 4.19.3.22 says “the case is systemically updated to the next phase,” which for a CP2000 is the statutory notice of deficiency (CP3219A). Interest keeps running throughout. Publication 5181 notes that a payment designated as a “6603 deposit” stops interest on the amount deposited while the dispute continues; IRM 4.19.3.23.1.15 covers how AUR treats it.
The IRM gives the CP2000 itself one due date, 30 days from the issuance date, with no separate period for addresses outside the United States (IRM 4.19.3.23.2.5); the 45-day allowance for foreign addresses applies to letters AUR issues during the case (IRM 4.19.3.23.10), and the other foreign distinction is internal, with foreign and APO/FPO CP2000 cases aged at 75 days rather than 60 (IRM 4.19.3.26.12). If the client is abroad, ask for the extension by phone before the due date rather than assuming extra time.
Expect the IRS side to be slower than the taxpayer side. Under Policy Statement P-21-3 as applied in IRM 4.19.3.23.1.5, “A quality response is timely when initiated within 30 calendar days of the IRS received date”, and “When a quality response can't be issued timely, an interim response is initiated by the 30th calendar day from the IRS received date. Issue a Letter 4314-C.” The AUR system generates the Letter 4314-C automatically for aged response batches, and the IRM says every interim letter tells the taxpayer when a final response can be expected and gives a contact. A Letter 4314-C therefore means the response is in the queue, not that it was rejected; the case stays in suspense and the next substantive document is a Letter 2626-C, a recomputed CP2000, a no-change letter or the CP3219A. Keep the proof of mailing, because the 30-day clock for the client runs from the notice date while AUR's clock runs from its received date.
A federal change rarely ends with the IRS. States that piggyback on federal income generally require the taxpayer to report a final federal change and will assess the state tax that follows. California is a clear example: FTB Publication 1008 says “You are required to notify us within six months of each final federal determination”, measured from the date the IRS assessment posts under IRC 6203; if the FTB is notified within that window it has two years to apply the change, if notified later it has four years, and if neither the taxpayer nor the IRS notifies it “the statute of limitations for assessment by the Franchise Tax Board remains open and we may issue an assessment at any time.” Check the client's state rule when the CP2000 is agreed or defaulted, and amend the state return on the state's schedule rather than waiting for a state notice.
How to respond
- Pull the wage and income transcript and the account transcript for the year so you can see every information return AUR used (see transcripts for practitioners). Compare each line of the notice to the return.
- Get authorization in place. The CP2000 response form has an authorization section for that notice only. For full representation, file Form 2848. AUR does not honor the return's designee box: “The Third-Party Designee (Check box) authority on Form 1040/ Form 1040-SR doesn't apply to Compliance issues, including AUR.” (IRM 4.19.3.23.1.21)
- Decide agree, partly agree or disagree, item by item. Publication 5181 asks the taxpayer to identify the line or schedule where an amount was reported and to break down totals that include it.
- If disagreeing, check the disagree box, sign the response form and attach a statement for each item with copies (not originals) of support: corrected 1099s, basis records, rollover proof (Form 5498 or a statement), or expenses that offset the income.
- If agreeing, sign the response form. On a joint return that is not fully paid, IRM 4.19.3.23.7 requires both spouses' signatures. Pay, or attach Form 9465 if an installment agreement is needed.
- If the CP2000 is right but the client has other items to report, the IRS notice page says to complete Form 1040-X, write “CP2000” at the top and send it with the response form. Otherwise Publication 5181 says: “In most cases, there’s no need for you to file an amended tax return.”
- Send by the IRS document upload tool using the access code on the IRS notice page, by fax to the campus number on the top left of the notice, or by mail to the address on the notice. Put the name and SSN on every faxed page (Publication 5181). Keep proof of the date sent.
AUR reads disputing language strictly. Under IRM 4.19.3.23.11 a reply is treated as disagreed if the taxpayer says they do not intend to waive appeal rights, even when the consent is signed or the tax is paid. Comments about interest alone do not count: “Comments concerning interest are not considered disputing, treat as an agreed response.” (IRM 4.19.3.23.7)
What the IRS does next
AUR sorts replies into agreed, partly agreed, needing more information, and disagreed (IRM 4.19.3.23). A full explanation produces a letter accepting the return as filed. A partial explanation produces a recomputed CP2000A. If AUR does not accept the reply, it explains why by letter, and if the disagreement remains it issues the CP3219A.
The CP3219A is the legal notice that opens the Tax Court door. IRM 4.19.3.2.1.1 tells employees the petition period is fixed: “This 90-day (or 150 day) period is statutory and IRS employees can't extend it.” AUR will still consider a reply received after the petition period but before assessment (IRM 4.19.3.23.1). After assessment, the route is an AUR reconsideration: IRM 4.19.3.27 defines these as responses received after the case has been closed on the AUR system, worked under the same guidelines as open cases. See audit reconsideration and the notice of deficiency. Once assessed, any unpaid amount enters the collection notice stream, starting with a CP14-type bill.
Publication 5181 also describes asking an examiner's manager to resolve a dispute and, for amounts of $25,000 or less per period, a small case Appeals request on Form 12203; see small case requests.
Related notices
- CP2501: the AUR inquiry that can come before a CP2000.
- CP2057: a soft notice that income may be missing, with no proposed tax.
- CP3219A: the AUR statutory notice of deficiency.
- CP22A: an adjustment notice, which may follow an amended return.
Questions practitioners ask
Is a CP2000 an audit?
It is a computer-matched proposal worked by AUR tax examiners at a campus, not a field or office examination. The procedures are in IRM 4.19.3 rather than the examination manuals, but the result can still be a deficiency assessed after a statutory notice.
Can my firm call AUR about the client's CP2000?
Yes with a valid Form 2848 on file, or for this notice only through the authorization section on the response form. The return's third party designee checkbox does not work for AUR (IRM 4.19.3.23.1.21).
How much extra time can we get?
Calling before the due date gets an additional 30 days (IRM 4.19.3.23.2.5). A written request is acknowledged by Letter 2626-C. Further extensions need extenuating circumstances (IRM 4.19.3.23.9.3). The 90-day petition period on the later CP3219A cannot be extended.
Does full payment count as agreement?
Before the statutory notice, full payment of the tax and penalties is treated as agreement unless the reply disputes something (IRM 4.19.3.23.7). After the CP3219A is issued, full payment alone is not accepted as agreement and AUR asks for the missing signatures.
The 1099 was issued in error. What does AUR want?
A statement explaining the error and supporting proof, ideally a corrected information return or a letter from the payer. IRM 4.19.3 has income-specific response instructions in IRM 4.19.3.23.5, and AUR can contact payers (IRM 4.19.3.23.9.6).