CP 2057 instead of CP 2000

[Guest Taxed]

In the last one month 3 of my clients got CP 2057 notice instead of the usual CP 2000. In all cases taxpayer agrees with the IRS that they failed to report certain income (interest, unemployment). With CP 2000 if you agreed you just had to mail the check with the response form, BUT with CP 2057 they are making the taxpayer file a 1040X. Just a payment will not do?

Anyone else seeing this? Why did IRS change. I liked the CP 2000, less work if the taxpayer agreed to the demand notice.

[jklcpa]

The CP2057 was started as a pilot program to deal with the millions of cases each year that weren't pursued because their costs to follow up and collect outweighed the benefit to the agency. The program is supposed to use less staff and lower costs to bring the money into the Treasury, and cut down on the correspondence between the taxpayer and agency.

[Guest Taxed]

More work for us preparing the 1040X?

[Mr. Pencil]

costs to follow up and collect outweighed the benefit to the agency.

I support that for everyone else of course, but for my own clients what's the benefit? If the notice is right, why not do nothing and wait for an assessment that can be simply paid?

IRS at http://www.irs.gov/Individuals/Understanding-your-CP2057-Notice says "You don't have to amend your return when the information is wrong. Instead, contact whoever reported the wrong information and ask them to correct it." But suppose they refuse? What legal rights does a taxpayer have regarding a CP2057?

[kcjenkins]

IRS at http://www.irs.gov/Individuals/Understanding-your-CP2057-Notice says "You don't have to amend your return when the information is wrong. Instead, contact whoever reported the wrong information and ask them to correct it." But suppose they refuse? What legal rights does a taxpayer have regarding a CP2057?

If the persons who provided the wrong info do not agree to correct it, you file the 1040X and use the 'explanation' section to object, with whatever information you have, attach any proof you have, and wait for a followup letter.

[Guest Taxed]

In my opinion IRS goofed on this one! If the Taxpayer agrees with the assertion in the CP 2057, they should allow taxpayer to pay the tax (give them a coupon to mail it in to the right place) and be done with. I think that will save money in the long run.

Right now as it stands if you agree, you got to file a 1040X. More expense for the taxpayer, and supposedly for IRS because now they have to process 1040X.

[jshtax]

I support that for everyone else of course, but for my own clients what's the benefit? If the notice is right, why not do nothing and wait for an assessment that can be simply paid?

IRS at http://www.irs.gov/Individuals/Understanding-your-CP2057-Notice says "You don't have to amend your return when the information is wrong. Instead, contact whoever reported the wrong information and ask them to correct it." But suppose they refuse? What legal rights does a taxpayer have regarding a CP2057?

I think they are giving the taxpayer a chance to report without penalties and interest.

[jklcpa]

In my opinion IRS goofed on this one! If the Taxpayer agrees with the assertion in the CP 2057, they should allow taxpayer to pay the tax (give them a coupon to mail it in to the right place) and be done with. I think that will save money in the long run.

Right now as it stands if you agree, you got to file a 1040X. More expense for the taxpayer, and supposedly for IRS because now they have to process 1040X.

I would disagree with that last statement. The CP2057 notice is generated by the AUR, IRS is getting the same result, and it probably costs them less, on an overall basis in this program, to process the 1040Xs received than the handling of the correspondence received back in from the CP2000s.

I think if a person chooses to ignore the CP2057 and do nothing, eventually the IRS' system would spit out a CP2000.

[Guest Taxed]

In my opinion they could have saved a lot of trees if they simply included a coupon or allowed you to send in the payment if you agreed 100% with IRS, without a 1040X (which still must be paper filed, and costs postage too).

[kcjenkins]

I agree with that. But it seems to be hard for government to do anything the simple direct way.

[bertrans]

I think they are giving the taxpayer a chance to report without penalties and interest.

If the TP, in response to this notice, files a 1040X and there is a resulting balance due in tax, the computer will automatically generate applicable statutory penalties and interest; the only penalty that will be 'escaped' is the accuracy-related/substantial understatement of income.