- What it means
- The IRS found a difference between your return and the income reported to it by third parties, and is asking you to explain before it proposes any tax.
- Respond within
- 30 days from the date on the notice
- What to send
- The response form, with an explanation of each item and documents that support it.
- Write it
- CP2000 response letter
- When to get help
- If you cannot reconcile the items, or the difference is large, get help now. Answering a CP2501 well prevents the CP2000 that follows an unanswered one.
What the letter says
A CP2501 is a question, not a proposal. The IRS matched information returns against your return and something did not line up. Unlike a CP2000, it has not computed the tax yet. It is asking you to explain.
Why you should answer it
An unanswered CP2501 becomes a CP2000 with tax, penalty, and interest computed against you. A good answer here can close the case with no change.
How to answer
For each item: say whether you agree, and if not, why. A 1099 reported under the wrong year, a duplicated form, a stock sale with basis the IRS could not see. Attach the document that proves it. Return the response form with your letter by the date on the notice.
What comes next
CP2005 if the IRS accepts your explanation and closes the case. CP2000 if it does not.
What to gather
- The notice with the list of items
- Your return with all schedules
- Every information return for that year
- Brokerage statements with basis for any sales listed
Write back
The CP2000 response letter tool builds the response in the order the IRS reads it. Fill it in, review it, print it, and send it with copies of the documents above and the notice stub on top.
Before you send anything
This is general information, not tax advice. Situations differ. Check with your tax advisor before you send anything. Nothing on this page creates a client relationship.