Most of what you've read online about IRS problems is wrong, or at least misleading. I'm Darrin Mish. I practice tax law in Tampa and I've been doing this for 32 years. Here's what's actually true.
The Honest Answer: Often Enough That You Should Not Just Pay It
I get this question constantly. Someone opens an envelope from the IRS, sees a CP2000 proposing they owe an extra $14,000, and the first instinct is panic. The second instinct is to write a check.
Do not write the check.
A CP2000 is not a bill. It is not a final determination. It is not even technically an assessment. It is a proposal generated by a computer program that compared third-party reports to what you filed and decided the two do not match. The IRS calls this the Automated Underreporter program. AUR for short.
The honest answer to “how often is a CP2000 wrong” is that the IRS does not publish a public accuracy rate. They will not tell you what percentage of CP2000s end up overstating what taxpayers actually owe. But after 32 years of working these cases, I can tell you what the patterns look like.
A meaningful portion of CP2000s are flat-out wrong about the bottom line. Many more get the broad strokes right but overstate the amount owed by thousands of dollars because the computer does not know the offsetting facts. And in the cases where the IRS is fully right, there are still often penalty issues that should not stand.
Here is what the numbers tell us, what the IRS will not tell you, and how to spot the errors.
The Volume Tells You Something
In 2024 the IRS issued roughly 1.19 million CP2000 and CP2501 notices combined. In 2025 that number dropped to around 383,000 as IRS staffing cutbacks reduced AUR program output.
Think about that scale. Even if the program were 95% accurate (it is not), that still leaves tens of thousands of wrong notices every year. At 90%, it is over 100,000.
And these notices are produced by an algorithm matching electronic data. It does not call your accountant. It does not look at your cost basis. It does not know that the $40,000 in 1099-K activity on your Venmo was your kid using your phone to send $20 dinner splits to friends. The computer flags a mismatch. A human spends a few minutes reviewing it. The notice goes out the door.
What TIGTA Has Said About AUR Accuracy
The Treasury Inspector General for Tax Administration audits IRS programs and reports publicly. On AUR, the picture has not been flattering.
TIGTA found that AUR program tax assessments grew from $4.24 billion in fiscal year 2006 to $7.84 billion in fiscal year 2013 – an 85% increase. That growth came from expansion of the program, not necessarily from better accuracy.
In one audit of fiscal year 2012 closed cases, TIGTA documented that examiners were incorrectly waiving accuracy-related penalties in some cases, resulting in millions in lost penalty revenue, while a separate programming flaw caused other penalties to be missed entirely. The IRS disagreed with parts of the report. That is your tax administration in action.
The takeaway is not that the AUR program is broken. The takeaway is that it is heavily automated, prone to systematic error, and operating at a scale where even small error rates translate to hundreds of thousands of wrong notices.
Why So Many CP2000s Are Wrong
After watching thousands of these cases, the error patterns are consistent. Here are the ones I see most often.
Missing Cost Basis on Investment Sales
This is the biggest one in 2026.
Your broker reports a $200,000 stock or crypto sale on Form 1099-B. The broker is not required to report what you originally paid for it. If you do not include the cost basis on your Form 8949, the AUR computer sees $200,000 of proceeds with no offsetting purchase price and treats the entire amount as taxable gain.
If you actually paid $185,000 for those shares, your real gain was $15,000, not $200,000. The CP2000 will propose tax on the full $200,000.
This is enormous with the new 1099-DA cryptocurrency reporting starting in 2025. Brokers report proceeds but are not required to report basis for 2025 transactions. The mismatches are going to be staggering.
Wallet-to-Wallet Crypto Transfers
You moved Bitcoin from Coinbase to your own Ledger wallet. Coinbase reported the outgoing transaction as a “disposal” on Form 1099-DA. The IRS computer now thinks you sold $80,000 worth of crypto.
You did not sell anything. You just moved your own asset from one place you control to another place you control. But the algorithm cannot tell the difference.
Multiple 1099s, One Form 8949
You traded on Coinbase, Kraken, and Gemini. Each platform issued a 1099-DA. Your Form 8949 reflects only one platform because you ran your numbers through tax software that did not pull from the other two.
The IRS matches each 1099-DA separately. Two of those three are now flagged as completely unreported income, even though every dollar of activity went on the same tax return.
Payment Apps and 1099-K Issues
You sold a used couch on eBay for $400. You split the rent with roommates on Venmo. You sold concert tickets through Ticketmaster. Each platform may have issued a 1099-K reporting “income” that was not actually income.
The IRS computer does not know whether $25,000 on your Venmo 1099-K is business revenue or three years of pizza-and-beer payments from your friends. It flags the whole amount.
Duplicate Reporting
The same income gets reported twice. Maybe your W-2 employer also issued a 1099 for the same wages because the bookkeeper made a mistake. Maybe two related entities each issued forms for amounts you only received once. The IRS sums them. The CP2000 proposes tax on the doubled amount.
Identity and SSN Mismatches
A 1099 issued under the wrong Social Security number lands in your file. Someone with a similar name had their income matched to you. These are rare but they happen and they generate real notices.
Income Already Reported in a Different Place
You included the income on your return, just not where the IRS expected to see it. Maybe it went on a Schedule C instead of a Schedule E. Maybe it flowed through from a partnership K-1 instead of appearing as direct 1099 income. The IRS computer does not always see the income on the return even when it is right there.
Why “Right About the Mismatch” Does Not Mean “Right About the Amount”
Even when a CP2000 catches a legitimate mismatch, the proposed tax is almost always overstated.
The notice computes tax as if the missing income had no offsetting deductions, no related expenses, no cost basis, no special tax treatment. If the IRS finds an unreported $50,000 stock sale, the notice proposes tax as if you had a $50,000 gain. If you can document a $45,000 cost basis, the actual taxable gain is $5,000.
I have seen $30,000 CP2000s shrink to $2,000 once the taxpayer provided basis documentation. I have seen $80,000 proposed assessments disappear entirely once we showed the income had been reported on a different line of the return.
The CP2000 is the IRS’s worst-case interpretation of an electronic mismatch. It is not the answer.
What This Means If You Got One
Do not pay it just because it has an IRS letterhead. Do not ignore it either.
Open the notice. Go line by line. Compare each disputed item against your own records. Pull your 1099s, your W-2s, your brokerage statements, your bank statements. If the IRS thinks you had $50,000 of income from somewhere, you should be able to either confirm it on your records or document why the number is wrong.
If you do not understand what the notice is claiming, you need help. The 30-day response window is not generous and the consequences of letting a CP2000 go to default assessment are real.
How to Push Back the Right Way
Respond by the deadline on the notice. The deadline is the date printed on the notice, not 30 days from when you opened the envelope.
Use the response form the IRS includes with the notice. Check the box for partial agreement or full disagreement. Do not write “I disagree” and leave it at that.
Attach documentation for every disputed item. Brokerage statements showing cost basis. Records showing the income was reported elsewhere. Bank records showing the 1099-K amounts were personal transfers, not business revenue. Be specific. Identify the line on the notice, the issue, and the correct figure with supporting documents.
Keep copies of everything. Send by certified mail with return receipt requested. If the IRS does not respond within 90 days, that is when you start escalating.
If the amount is significant or the issues are complex, get a tax attorney involved before you respond. A bad response is harder to fix than no response at all, and the CP2000 process can be a stepping stone to a full audit if it goes sideways.
The Bottom Line
The IRS does not publish a CP2000 accuracy rate. But the program is automated, operates at a scale of hundreds of thousands of notices per year, and has documented systematic issues in TIGTA audits.
In real-world practice, a meaningful share of CP2000s overstate what the taxpayer actually owes. Some are wrong about whether there is any additional tax at all. Most can be reduced or eliminated with proper documentation and a competent response.
A CP2000 in the mail is not a bill. It is the IRS’s opening offer based on incomplete information. Treat it accordingly.
Get Help Now
If you received a CP2000 and the proposed tax is significant, do not respond on your own without understanding what the IRS is actually claiming. Contact the Law Offices of Darrin T. Mish, P.A. at (813) 229-7100 for a free consultation.