How it works
The IRS Automated Underreporter program compares the income reported on your return with the forms it received from employers, banks, brokers, and crypto exchanges. When they do not match, it issues a CP2000 proposing additional tax, interest, and usually a 20 percent accuracy-related penalty. It is not an audit and not a bill. You have 30 days to agree, disagree with documentation, or partially agree. No response leads to a statutory notice of deficiency.
Why it matters
For crypto, the mismatch is often a Form 1099-DA or 1099-B that reports gross proceeds with no basis, so the proposed tax can be many times what is actually owed. The right response is usually a reconciliation with supporting records, not a check.
Example
A CP2000 proposes 18,000 dollars of additional tax based on 60,000 dollars of unreported crypto proceeds. The taxpayer’s records show 52,000 dollars of basis. A response with a reconciled Form 8949 reduces the adjustment to the tax on 8,000 dollars of gain.
Related: CP2501, CP3219A, accuracy-related penalty. Read more: how to respond to a CP2000.
