Did you get a CP2000 notice from the IRS?
A CP2000 shows a dollar figure and reads like a bill. It is not one. It means the IRS matched data from an exchange against your return and found a gap. Here is what the notice is, how it differs from the 6173 and 6174 letters, and how to answer it.
A CP2000 is easy to misread. It lists a proposed balance, sometimes a large one, so people assume the IRS has already decided they owe that amount. It hasn't. The notice comes out of an automated system that compares what other people reported about you against what you filed. When an exchange tells the IRS you had activity your return doesn't reflect, that system flags the difference and mails a CP2000. Take it seriously, but don't treat it as a verdict.
What a CP2000 actually is
The formal name is an underreporter notice. A document the IRS received, in crypto cases usually a 1099 from an exchange, does not line up with a line on your return. The notice proposes an adjustment and gives you a date to agree or disagree. Nothing has been assessed yet. If you reply with records that explain the difference, the proposed number often drops or disappears. It is a starting point for a conversation, not the last word.
Why crypto sets these off so often
Exchanges report what they can see, which is proceeds. They usually cannot see what you paid, so the notice treats your entire sale as gain. Buy at $9,000, sell at $10,000, and a notice that has only the $10,000 in proceeds may propose tax on the full $10,000 instead of the $1,000 you actually made. Your cost basis is what brings the figure back to reality.
This mismatch is becoming more common, not less. Starting with 2025 transactions, exchanges file Form 1099-DA reporting your gross proceeds to the IRS, and basis reporting phases in for assets acquired from 2026 onward. Until basis reporting fully catches up, the IRS keeps seeing proceeds without the other half of the math, which is the exact setup that produces an inflated CP2000.
How a CP2000 differs from the 6173 and 6174 letters
A CP2000 is not the same as the softer letters the IRS used in its 2019 crypto campaign, when it mailed more than 10,000 notices covering the 2013 through 2017 tax years. Those letters carried different obligations. Before you do anything, find the number on your notice and confirm which one you are holding.
First, confirm the notice is real
Scammers copy IRS letters, and crypto holders are a favorite target. A genuine CP2000 carries the notice number in the upper-right corner, explains the specific income in question, and never demands payment by gift card, wire, or crypto. The IRS will not threaten arrest over the phone. If anything feels off, do not call a number printed on the letter itself. Look up the IRS number on irs.gov and verify the notice from there.
The people who answer these notices for a living know what a clean response looks like. We'll match you with one.
Get matched with a pro who handles it →How to respond
The notice includes a response form and a date. Work through it in order.
- Read the notice closely so you know which transactions it is questioning.
- Complete the response form whether you agree or disagree, and follow its instructions.
- If you agree, sign and return it. Both spouses sign if you filed a joint return.
- If an exchange or other payer reported the wrong figure, ask them for a corrected statement and include a copy with your reply.
- Attach your cost basis, transaction by transaction, with exports that back it up.
- Get everything postmarked before the response date on the notice.
What happens if you ignore it
Silence is the one response that reliably goes badly. Miss the date and the IRS follows the CP2000 with a Notice of Deficiency, the 90-day letter, and then assesses the tax and sends a real bill. At that point your options narrow, and the amount is the inflated one, the version that never accounted for your basis. Answering on time costs far less than unwinding an assessment afterward.
What to do this week
- Find the number and the date. Confirm it says CP2000, then put the response date somewhere you will see it.
- Pull your records. Exchange exports and wallet history for every year the notice names.
- Rebuild your basis. Reconstruct cost basis for the flagged trades so you can show real gain, not gross proceeds.
- Respond in writing before the deadline, even if you only partly agree.
- Get help if the years are messy. Several exchanges, DeFi activity, or missing basis is exactly when a specialist earns the fee.
A CP2000 is common, and it is answerable. The gap between a documented reply and no reply is usually the gap between a corrected return and a bill you did not owe.