The IRS is testing a pilot program in which it will mail a new notice to about 31,000 taxpayers who may be under reporting income on tax returns. The IRS designed the so-called soft notice to encourage taxpayers to self-correct tax returns and to increase voluntary compliance among an estimated 15 million potential cases of underreporting each year that contribute to the tax gap.
The new CP 2057 notices, like CP 2000 notices, are automatically generated by the IRS’s computerized document matching system, which compares information on a taxpayer’s tax return with documents from a third party, such as Forms W-2 from an employer.
A taxpayer who receives a CP 2057 notice is not required to respond to the IRS.
The notice instructs the taxpayer to contact the third party if the taxpayer believes there is a mistake with the third party’s information. If the error lies with the taxpayer, he is asked to file an amended return. If the taxpayer does not respond, the IRS does not take any action. But should the IRS discover discrepancies the next year, the taxpayer is bumped to the top of the list for receiving a tougher CP 2000 notice.