STEP 1 — NOTICE ANALYSIS A CP2000 notice is issued when the IRS receives income information from third parties (employers, banks, clients) that does not match what was reported on your tax return. This is not an audit — it is a proposed change. The IRS is proposing to add $8,500 to your taxable income and collect an additional $2,040 in taxes plus interest and penalties. If you do not respond by the deadline shown on the notice (typically 60 days), the IRS will automatically assess the additional tax, interest, and penalties and begin collection proceedings. Responding promptly and correctly is critical. --- STEP 2 — RESPONSE LETTER John Miller [Full Address] Texas, [ZIP Code] SSN: XXX-XX-1234 Tax Year: 2022 [Date] Internal Revenue Service [IRS Address from Notice] Re: Response to CP2000 Notice — Tax Year 2022 Notice Date: [Date on Notice] Social Security Number: XXX-XX-1234 Dear IRS Automated Underreporter Unit, I am writing in response to the CP2000 notice dated [notice date] proposing additional tax of $2,040 for the 2022 tax year. I respectfully disagree with the proposed changes and am submitting this response with supporting documentation to demonstrate that the income in question was correctly reported on my original tax return. The CP2000 notice references $8,500 in income reported on a 1099-NEC form issued by [Client Name]. This income was reported in full on my original 2022 Form 1040, Schedule C (Profit or Loss from Business), under my freelance consulting activity. The income was not omitted — it appears the automated matching system did not correctly cross-reference the Schedule C filing with the 1099-NEC income. In addition to reporting the full $8,500 in gross income, I correctly deducted $3,200 in ordinary and necessary business expenses related to this freelance activity, resulting in a net profit of $5,300, which was included in my adjusted gross income. These deductions are fully substantiated by the receipts and records enclosed herewith. I respectfully request that the IRS review the enclosed copy of my 2022 Schedule C and supporting business expense documentation, and close this matter without assessment of additional tax, interest, or penalties. Sincerely, John Miller [Phone Number] | [Email Address] Enclosures: Copy of 2022 Schedule C, 1099-NEC from client, business expense receipts --- STEP 3 — KEY ARGUMENTS 1. The income was reported — Schedule C clearly shows the $8,500 gross income. The IRS matching system failed to cross-reference the correct schedule. 2. Business expenses are legitimate deductions — The $3,200 in deductions reduces taxable income and is supported by receipts. The IRS cannot assess tax on gross income while ignoring allowable deductions. 3. No additional tax is owed — Because income was correctly reported and deductions are valid, the proposed $2,040 assessment is incorrect and should be withdrawn in full. --- STEP 4 — SUPPORTING DOCUMENTS CHECKLIST → Copy of original 2022 Form 1040 with all schedules → Copy of Schedule C showing $8,500 gross income and $3,200 expenses → Copy of 1099-NEC received from client → Business expense receipts totalling $3,200 → Bank statements showing receipt of the $8,500 payment → Copy of CP2000 notice (keep original for your records) --- STEP 5 — NEXT STEPS & DEADLINES 1. Send response via certified mail with return receipt — this creates a legal record of timely response. 2. Respond before the deadline on the notice — typically 60 days from notice date. Missing this deadline triggers automatic assessment. 3. Keep copies of everything you send to the IRS. 4. If no response received within 30 days of sending your letter, call the IRS at 1-800-829-1040 and reference your CP2000 notice number. 5. If the IRS rejects your response, you have the right to appeal through the IRS Office of Appeals — consult a CPA or tax attorney at this stage.