My 2006 1040 was audited, resulting in a "No Change" Letter.I received a CP2000 for '06. If I owe, do i pay?

Question

The CP2000 letter was received from Atlanta just days before the "No Change" letter was issued by Austin (who had been conducting an audit). Does one hand of the IRS know what the other is doing, and in this case, having received a "No Change" letter regarding my 2006 1040, do I need to pay anything if money is owed based on the '06 CP2000? And can the IRS continue to dig and uncover more issues via the CP2000 after an audit for that same tax year concluded in a "No Change" letter?

Answer 1

No change means there is no additional tax due. It most likely means the year is closed to further audit.

Answer 2

The IRS can continue to challenge your tax return for 2006.  If the CP2000 addresses a different issue than the previous issue, you have to deal with it.  It will not be dismissed because of the no change letter for a different issue.

Answer 3

As others have noted, these are indeed two different things. One is an audit of claimed deductions or credits, the other (CP2000) is for underreported income.

Answer 4

If the CP2000 was for the same issue as the audit, you should be OK.  But if it's for an additional issue, then if you owe on that, you will have to pay.  An audit usually just looks at one area of your return, not all of it, so these are very likely totally separate issues.

Answer 5

An audit is questioning something you claimed on your tax return.  A CP2000 letter is questioning something you forgot to report on the tax return.  It's highly unlikely that they overlapped.

Eg, audit was for a claim of, say, EIC or an education credit.

CP2000 says you forgot to claim $1000 of interest income.

You'd have to pay up for the missing income.