The IRS has had a computer matching system for quite awhile now.

It automatically matches the numbers from your tax return, with what was reported to the IRS by others such as:

• W-2,
• 1098 mortgage interest
• 1099’s for contract work
• Social Security Income
• Interest income
• Dividends
• Stock sales
• K-1 from Partnerships or Corps
• Alimony
• Gambling winnings

If there was income reported to the IRS that was not included on your tax return, you will receive a letter in the mail called a CP2000 or what I refer to as a Love Letter. This letter will describe what the item in question is and usually will recalculate your tax based on their changes. You can then agree and pay the additional tax (plus fees and interest usually), disagree with the changes and submit evidence of why you disagree, or file an amended tax return.

If the items in question are stock sales, filing an amended return is usually required to ALSO include the cost basis/purchase price of the sales, but amending is not necessary for items such as forgotten interest income.

However, now for some reason we are now seeing Love Letters that only state the item in question and if you agree with the change, ask you to send in an amended return! No simple check yes and mail the check! Now you must go back to your accountant and have them amend! Even for missing a measly $1,000 in Social Security income!

Not sure the reason for this change, and why the IRS wants the tax accountants to get paid for a simple recalc that they used to already do for you… I guess good for us in the biz! #ThanksIRS