CP14 and CP2000: two IRS letters people mix up

Both arrive with an amount due. But they are completely different letters, and you respond to them differently.

CP14: you owe on a return you filed

The IRS processed your own return and sees the tax wasn't paid in full. The amount usually matches what you reported yourself, plus interest and a late-payment penalty. What to do: compare it with your return and pay, or set up a payment plan. Interest accrues every day.

CP2000: the IRS thinks you didn't report all your income

This is a proposed adjustment. Data from 1099s, W-2s or your broker didn't match your return. It isn't a debt yet: you can agree, partly agree, or disagree with documents.

The key thing in a CP2000 is the response deadline

Usually 30 days from the date of the letter. If you don't respond, the IRS sends a Notice of Deficiency (I wrote about it on October 14), and disputing it gets harder.

A common mistake

Paying a CP2000 right away without checking it. Often the letter ignores expenses or the cost basis of stock you sold, and the real amount is lower, or there's nothing due at all.