CP2000 Notices Are Misreporting Schedule E Deductions as Schedule A – Here’s What to Do
📬 What We’re Seeing: CP2000 Notices with the Wrong Schedule?
At Orlando Tax Law, we’re seeing a noticeable spike in CP2000 notices—IRS Automated Underreporter (AUR) letters—flagging what appear to be Schedule A deductions, when in reality, the issue lies with mortgage interest reported on Schedule E.
🧾 What’s a CP2000 Notice?
A CP2000 is not a bill—but it might feel like one. It’s the IRS saying:
“Hey, something on your tax return doesn’t match what we received from a third party (like a bank, employer, or lender).”
The notice includes a proposed change and often suggests you owe more tax. It gives you a chance to respond—but you need to do it correctly and promptly.
🧠 Why These Are Tricky Right Now
Here’s what we’re seeing in several recent CP2000s:
- The IRS is identifying “Schedule A changes”…
- But the deductions in question are actually tied to rental property mortgage interest on Schedule E
- Clients didn’t do anything wrong—but the data matching system is misidentifying the issue
This kind of mismatch is frustrating—and it’s easy to misunderstand the notice or respond incorrectly. We’ve had to call the IRS AUR unit directly to walk through the issue and clarify that Schedule E was properly completed.
⚠️ Why You Shouldn’t Just Pay It
We’ve seen clients ready to accept the changes and pay, simply because the notice looks official and confusing. But if you pay it without challenging the error:
- You may be paying tax you don’t owe
- The IRS may assume their adjustment was correct (creating a precedent for future years)
- You lose the chance to correct your tax record
👩⚖️ Why You Should Contact Us
If you’ve received a CP2000 notice—especially one referencing deductions you don’t recognize—don’t panic, and don’t pay right away. We’ll:
- Review your return and supporting docs
- Confirm whether the proposed changes are valid
- Contact the IRS AUR unit if needed
- Draft the appropriate response to protect your position
We’re here to untangle the IRS’s confusion so you don’t have to.
📞 Let’s Clear It Up
We’re seeing more of these letters right now—so if one landed in your mailbox, you’re not alone.
📱 Call us today or schedule a consultation online. The sooner we review your situation, the better prepared you’ll be.
