An IRS CP2000 notice is mailed to a taxpayer when income reported from third-party sources such as an employer, bank, or mortgage company does not match the income reported on the tax return.

It is not a tax bill or a formal audit notification; it merely informs you about the information the IRS has received and how it affects your tax. It is, however, important to pay attention to what your CP2000 notice states because interest accrues on your unpaid balance until you pay it in full.

If you receive a CP2000 notice in the mail complete the response form. If your notice doesn’t have a response form, then follow the notice instructions. Generally, you must respond within 30 days of the date printed on the notice. You may request additional time to respond, and if you cannot pay the full amount that you owe, you can set up a payment plan with the IRS.

If the information on the CP2000 notice is not correct, then check the notice response form for instructions on what to do next. You also may want to contact whoever reported the information and ask them to correct it.

If the information is wrong because someone else is using your name and social security number please contact the IRS and let them know. You can also use the link on the IRS Identity theft information web page to find out more about what you can do.

If you do not respond, the IRS will send another notice. If the IRS does not accept the information provided, it will send IRS Notice CP3219A, Statutory Notice of Deficiency, and information about how to challenge the decision in Tax Court.

Do I Need to Amend my Return?

If the information displayed in the CP2000 notice is correct, you don’t need to amend your return unless you have additional income, credits or expenses to report. If you agree with the IRS notice, follow the instructions to sign the response page and return it to the IRS in the envelope provided.

If you have additional income, credits or expenses to report, complete and submit a Form 1040-X, Amended U.S. Individual Income Tax Return. If you need assistance with this, please call the office.

How to Avoid Receiving an IRS CP2000 notice:

• Keep accurate and detailed records.
• Wait until you receive all of your income statements before filing your tax return.
• Check the records you receive from your employer, mortgage company, bank, or other sources of income (W-2s, 1098s, 1099s, etc.) to make sure they are correct.
• Include all your income on your tax return including that from a second job or fees derived from the sharing economy (e.g. renting a spare room out on Airbnb).
• Follow the instructions on how to report income, expenses and deductions.
• File an amended tax return for any information you receive after you’ve filed your return.
• Use a professional tax preparer who will help you avoid mistakes and find credits and deductions you may qualify for.

If you have any questions about IRS notices, help is just a phone call away.

• By Leon Clinton
• July 4, 2019

July 10

Employees Who Work for Tips – If you received $20 or more in tips during June, report them to your employer. You can use Form 4070.

July 15

Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in June.

Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in June.

July 31

Employers – Social Security, Medicare, and withheld income tax. File Form 941 for the second quarter of 2019. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until August 12 to file the return.

Employers – Federal unemployment tax. Deposit the tax owed through June if more than $500.

Employers – If you maintain an employee benefit plan, such as a pension, profit-sharing, or stock bonus plan, file Form 5500 or 5500-EZ for calendar-year 2018. If you use a fiscal year as your plan year, file the form by the last day of the seventh month after the plan year ends.

Certain Small Employers – Deposit any undeposited tax if your tax liability is $2,500 or more for 2019 but less than $2,500 for the second quarter.

• By Leon Clinton
• July 1, 2019

Your customer list is gold. That’s why it is so important to protect those Social Security and bank card numbers in your payroll, client, and vendor records from intruders and make sure they are only viewed by authorized employees.

It’s not just large corporations and financial institutions that get hacked. That’s what the bad guys want you to think. In reality, small businesses are often the victims of data breaches because their owners think they’re immune from data theft and destruction.

Even if you’re password-protecting your PCs and running antivirus and anti-malware software, there’s more you need to do when it comes to your accounting records. Let’s take a closer look.

Restrict access by setting up user permissions.

If you have multiple staff members using QuickBooks, don’t share the same user name and password. That obviously gives everyone access to all data and activity. If something goes awry, you have no way of knowing when or how it happened, and who was responsible. To protect yourself and everyone else who logs in, it’s critical that all users have their own unique logins. They should only be allowed to access information and functions that relate to their job duties.

Figure 1: You can restrict QuickBooks users to certain screens and activities.

To assign these permission levels, open the Company menu and click on Set Up Users and Passwords, then Set Up Users. This opens the User List window, where you should be identified as the Admin. Click Add User. Enter a user name and password for an employee who needs access (this can be changed later). Check the box in front of Add this user to my QuickBooks license.

Tip: Not sure how many users are allowed under your current license? Click F2 and look in the upper left corner. If you need to add licenses, please call.

Click Next. The next screen lists three options. You can grant access to all areas or to selected areas. You can also create a login for us as your external accountant, which lets us see everything except sensitive customer data. Select the second option and click Next. You can see in the image above that you can give the employee different levels of responsibility. When you’ve made your choice, click Next. The subsequent nine screens deal with different areas of QuickBooks and their related activities.

Tip: When you need to change your password, which you should do at a minimum every three months, go to Company | Set Up Users and Passwords | Change Your Password.

Save your company file elsewhere.

You should always be backing up your company file to an external storage device (like a CD or thumb drive). To set this up, open the Filemenu and select Back Up Company, then Create Local Backup. This window will open:

Figure 2: The Create Backup window

Make sure Local backup is selected, then click the Options button below (not pictured here). Click Browse to see a directory of your PC and select the correct destination. Leave the two boxes below it checked; this will add the backup date/time to the filename and limit the number of backup copies to three.

By default, QuickBooks will remind you to back up your file every fourth time you close your company file; you can change this number if you prefer. Leave the Complete verification option checked and click OK, then Next. Specify when you want to save your backup copy and click Next again. You can schedule regular backups of your company file on the next screen if you’d like. When you’ve completed this screen, click Finish.

You should also consider saving a copy of your company file to the cloud. Intuit offers its own service for this; it costs $9.95/month or $99.95 annually, but it gives you 100 GB of storage space, so you can back up other critical business files, too. If you can’t swing this financially, at least store your backups to a portable device that you can carry offsite.

Warning: If you already pay for cloud storage from another vendor, don’t assume you can just copy your QuickBooks file to it. Please call if you have questions about this.

Other Steps

There are other things you can do to protect your QuickBooks data, including:Insist on strong passwords. Yes, it’s a pain to create and remember them, but it’s critical here.Keep everything updated. That includes your operating system and anything else that requires updates.Minimize web browsing on work computers and remind employees about smart email behaviors.

While the software’s instructions are straightforward with regard to setting up any kind of backup system for QuickBooks, please don’t hesitate to call if you are worried about jeopardizing the integrity of your company files.

• By Leon Clinton
• June 30, 2019