Recently received notice from IRS that we have missing income from Securities on 2017 tax return. Contacted tax preparer and provided Fidelity stocks statement. They then produced forms 1040x and X (for CA State) along with amended 1040 and 540. Do I still need to respond to IRS letter to indicate that I disagree with the proposed changes and provide explanation? My tax preparer is telling me that I don’t need to respond to the notice and to basically just send the amended tax returns and forms including Fidelity statement directly to IRS. Is this correct? Shouldn’t I do both? I’m anxious about not responding to the actual notice.
One thing that the IRS says in the CP-2000 letter is to NOT respond with an amended return. You can use an amended return for informational purposes to demonstrate your figures, but filing an amended return is generally not appropriate.
What I include with a CP-2000 letter is a copy of the CP-2000 letter, the amended return (unsigned) and a letter of explanation detailing what I do or do not agree with on the CP-2000 letter. If by chance, the amended return agrees with the CP-2000 letter then I don't send in the amended return at all, I simply send back the form included with the CP-2000 letter where you indicate that you agree with the proposed changes.