CP2000 letter of explanation to the payee

Template from tincompliance.com. A letter from a payer (filer) to a payee whose IRS Notice CP2000 was caused by an incorrect Form 1099. The payee attaches it, with the corrected form, to the CP2000 response. IRM 21.3.11.6.1 tells the IRS help desk to have the filer send "a letter of explanation as to how the error was made"; IRM 3.42.9.14.1 lists what the letter must include: filer name and contact information, recipient name, TIN, type of form, correct money amount, brief explanation of the problem, and a copy of the original or corrected form. Keep it to one page; it is read by an IRS tax examiner, not only by the payee. Not legal or tax advice.

[Company legal name]

[Address]

[Contact name], [title]

[Phone] | [Email]

Payer EIN: [00-0000000]

[Date]

[Payee name]

[Payee address]

Re: Correction of Form [1099-NEC / 1099-MISC / 1099-INT / other] for tax year [YYYY]; IRS Notice CP2000 dated [notice date]

Dear [Payee name]:

This letter explains an error in an information return that [Company] filed with the Internal Revenue Service under your taxpayer identification number, and confirms that a corrected return has been filed. Please include a copy of this letter and the enclosed corrected form with your response to Notice CP2000.

1. Recipient and form

2. What was reported and what is correct

3. Brief explanation of the error

[Choose one and delete the others.]

• Duplicate filing. The same Form 1099 was transmitted to the IRS twice, on [date] and [date]. Only one payment of $[amount] was made. The duplicate has been corrected to show zero.
• Overstated amount. The original form reported $[amount]. The correct amount paid to you in [YYYY] was $[amount]. The difference was [a payment made in the following year / a payment to a different payee / a data-entry error / a refunded or voided payment].
• Wrong taxpayer identification number. The payment reported on the original form was not made to you. Your identification number was entered in error for a payment to another payee. A corrected Form 1099 showing zero has been filed under your number, and the payment has been reported under the correct payee's number.
• Wrong recipient name. The original form carried an incorrect name with your number. A corrected form has been filed [showing zero under the original entry and a new original with the correct information].

4. Correction filed

A [Type 1 / Type 2] correction was filed with the IRS on [date] [electronically through IRIS, receipt ID ___ / on paper with Form 1096]. A copy of the corrected Form 1099, with the CORRECTED box marked, is enclosed. [For a wrong-TIN or wrong-name error: the corrected form under your number shows $0 in every amount box, which removes the payment from your record.]

The error was [Company]'s and not yours. If the IRS or your tax adviser needs anything further to resolve the notice, please have them contact [contact name] at [phone] or [email].

Sincerely,

______________________________

[Name]

[Title]

[Company legal name]

Enclosures: Copy of corrected Form 1099 for tax year [YYYY]; [copy of the original form]

For the payee: respond to the CP2000 by the date on the notice, check the box indicating you do not agree with all of the proposed changes, and attach this letter and the corrected form. Do not wait for the correction to post to your account; the IRS unit that issued the notice does not.

For the payer: file the correction the same way the original was filed (IRIS or FIRE for electronic, official forms with a new Form 1096 for paper). A duplicated return is a Type 1 correction showing zero; a wrong TIN or wrong name is a Type 2 correction (zero under the wrong entry, then a new original). If 50 or more payees are affected, call the IRS Technical Services Operation at 866-455-7438 so the returns can be flagged on the IRS side (IRM 3.42.9.14.1). Guide: tincompliance.com/guides/your-1099-caused-a-payees-cp2000/