What a CP2000 notice is
According to the IRS page on the CP2000 notice, the IRS sends it when income or payment information from third parties, such as financial institutions, does not match what you reported. The notice proposes changes to your return that could raise, lower, or not change your tax.
The IRS states that the notice is not a bill, but a response may be required. Reply by the date listed on the notice.
Why crypto sales can lead to one
Brokers report digital asset sales on Form 1099-DA. Under the 2025 instructions, brokers report gross proceeds for 2025 sales and are not required to report basis. From 2026, the current instructions require basis only for covered assets; assets acquired before 2026 or transferred in to the broker are noncovered, and basis for them may be left out.
The IRS compares what brokers reported with your return. If a sale is missing from the return, or the figures do not line up, the proposed change is built from the information the IRS received. When that information shows proceeds without basis, the proposed amount can be larger than your actual gain.
Read the notice line by line
- Response date. Note the date on the notice before anything else.
- Tax year and payer. Which year, which broker, and which form the notice relies on.
- Each listed amount. Compare every item with your Form 1099-DA and with the crypto pages of the return you filed.
- Response form. Check whether the notice includes one and what it asks you to indicate.
Records to gather
- The Form 1099-DA for that year, and any corrected form the broker issued.
- The broker’s transaction history for the same year: sales, trades, and fees.
- Acquisition records for every unit sold: purchase confirmations or exports from where you bought it, including earlier years and other exchanges.
- Transfer evidence for assets moved in: the sending and receiving records and transaction IDs. On a 2026 form, boxes 12a and 12b show transferred-in units and the transfer date.
- Your filed return’s crypto pages (Form 8949 and Schedule D) and the software report they came from.
- A reconciliation that ties each line on the notice to the 1099-DA, your records, and the return, with every difference explained.
Demo: trace one sale from the notice
Fictional records · No tax calculation.
- Line on the notice $12,000
- Proceeds for 0.20 BTC sold on Exchange B, reported on Form 1099-DA without basis.
- Acquisition found $7,400
- Purchase of 0.20 BTC on Exchange A in an earlier year. Exchange A trade history, ref. DEMO-TR-21.
- Transfer matched 0.20 BTC
- Withdrawal from Exchange A and deposit to Exchange B, same transaction ID. Ref. DEMO-TX-09.
The reconciliation note shows that the proceeds match the broker’s figure and documents the acquisition and the transfer behind the basis. Your CPA or EA decides how to use it in the reply.
Who replies, and how
The reply is yours, or your CPA’s or EA’s if you authorize them on the response form. The IRS page explains that you complete and sign the response form, state whether you agree or disagree, and include supporting documentation. Replies go through the IRS document upload tool, by fax, or by mail, as shown on the notice.
Whether to agree, and how to present the records, is a decision for you and your tax preparer. Organized records make that decision easier to support.
When a records review can help
If the notice involves sales with missing basis, transfers between accounts, or several brokers, Elena’s Form 1099-DA reconciliation traces the acquisition history, matches transfers, and documents each difference in a package you or your CPA can use for the reply. Tax advice, return preparation, and filing are not included.
This guide is general information based on IRS pages as of October 2026. It is not tax advice. Always follow the instructions and dates on your own notice.
See how the records fit together
View the illustrative record package to compare source rows, a working ledger, correction notes, and an open-items list.
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