CP2000 Response Letter Sample
Below are various CP2000 response letter samples that we have submitted to the IRS Automated Underreporter (AUR) Unit.
CP2000 Response Letter Sample Heading
This is the heading we typically use on our CP2000 response letters:
Today’s Date
To:
U.S. Department of the Treasury
Internal Revenue Service
Individual Automated Underreporter Unit
Fax: 877-477-0962
Regarding (Taxpayer Information):
Name: [Your Name]
SSN: [Your Social Security Number]
Subject:
Notice CP2000, Dated [Notice Date]
AUR Control Number: [AUR Control Number on Your Notice]
Taxpayer disagrees with IRS adjustments
Form:
Form 1040
Tax Year:
[Tax Year]
CP2000 Response Letter Sample for Unreported Cryptocurrency Transactions
Here is what we put after the heading for a client to whom the IRS had sent a CP2000 because our client had not reported several cryptocurrency transactions on his tax return. Note that this response is from my perspective as a representative of the taxpayer; if you are communicating with the IRS directly with respect to a CP2000 they sent you, you would obviously want to modify the language accordingly.
To Whom It May Concern:
I am writing on behalf of the above-named taxpayer pursuant to a power of attorney (Form 2848 attached). This letter is in response to an underreporter notice, referenced above (copy attached).
The taxpayer disagrees with part of the IRS’ proposed changes. Please take into account the information and substantiation contained herein.
Agreed Items
The taxpayer agrees with the IRS’ proposed changes with respect to the following items:
- Form W-2 issued by United States Postal Service
- Form 1099-INT issued by Capital One N.A.
- Form 1099-INT issued by Goldman Sachs Bank USA
- Form 1099-INT issued by PNCBank, National Association
- Form 1099-MISC issued by Apex Clearing
- Form 1099-MISC issued by BlockFi Lending LLC
- Form 1099-MISC issued by Cruz & Jonson v. Wal-Mart Associates Inc.
- Form 1099-B issued by Apex Clearing
The taxpayer failed to report the items above on his 2021 Form 1040 and agrees that these items are taxable.
Unagreed Items
The taxpayer does not agree with the IRS’ proposed changes with respect to the following items:
- 11 items pertaining to Form 1099-B issued by BlockFi Lending LLC in the amount of $50,182 worth of USDC (USD coin)
The IRS is not taking into account the taxpayer’s basis in his USDC (USD coin), a digital “stablecoin” whose value is pegged to the United States dollar. Since the price of USDC does not fluctuate — and is always equal to $1.00 — the taxpayer’s basis is equal to his proceeds with respect to all 11 of the Form 1099-B items received from BlockFi Lending LLC.
Therefore, the taxpayer’s basis in the $50,182 of USDC disposed is likewise $50,182 and therefore the increase in the taxpayer’s income with respect to these disposals should be zero.
We have attached the taxpayer’s original Form 1040 as well as a corrected Form 1040 indicating what we believe the taxpayer’s corrected 2021 liability should be; this Form 1040 reports all of the items indicated on the CP2000.
Taxpayer’s Proposed Conclusion
Taxpayer consents to the proposed assessment of tax with respect to the items indicated under “Agreed Items”.
However, taxpayer does not agree with the proposed assessment of tax with respect to the items indicated under “Unagreed Items” for reasons stated previously.
Thank you for consideration of this matter.
I can be reached via phone at 213-222-2222 or via fax at 213-333-3333.
Sincerely,
I, as power of attorney representative, prepared and submitted this letter and accompanying documents. I declare and affirm under penalty of perjury that the statements made herein (including accompanying documents) are true and correct to the best of my knowledge, information, and belief.
[My Signature]
Logan Allec, CPA
Attached:
Form 2848
CP2000 Dated September 11, 2023
Copy of taxpayer’s original return
Copy of taxpayer’s corrected return
Author:
Logan Allec, CPA, Founder and Owner
Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.
