What is Notice CP2000 for cryptocurrency?

If you received a CP2000 for your cryptocurrency activity, you should take action immediately. 

In this guide, we’ll break down everything you need to know about CP2000, and what you should do if you receive one.

What is Notice CP2000?

A CP2000 is sent automatically by the IRS to anyone with a discrepancy on their federal tax return. The letter shows how much you owe to the IRS  — including interest! 

It’s important to note that CP2000 letters can be disputed. These letters can be inaccurate — especially if you’ve transferred crypto into or out of the exchange. 

Does the IRS know how much I owe in crypto taxes?

Popular exchanges like Coinbase, Gemini, and others send the government 1099 forms detailing your cryptocurrency transactions. 

Remember, these exchanges can only see the transactions that you’ve conducted. That means that if you’ve transferred crypto into or out of an exchange, your tax forms may be inaccurate. 

Starting in 2026, cryptocurrency exchanges will be required to issue Form 1099-DA detailing capital gains and losses for all users. It’s likely that these forms will lead to more CP2000 letters being erroneously sent to investors.

In this example, Jon may be required to recognize his entire $1,500 sale as a capital gain if he hasn’t kept accurate records of his cost basis. To avoid situations like this, you should keep careful records of your cryptocurrency transactions.

What should I do if I receive a CP2000? 

You have 30 days to dispute CP2000. 

The first thing you should do is calculate the correct amount of taxes you owe on your cryptocurrency gains. As noted earlier, tax forms provided by cryptocurrency exchanges can be inaccurate. 

If you don’t want to do these calculations by hand, you can use cryptocurrency tax software to automate the entire tax reporting process. Then, you can submit your tax report to the IRS to dispute their claims. 

Once you know how much you do or do not truly owe in taxes, you will be equipped to respond to the CP2000 notice. It’s very possible that the amount the IRS is claiming that you owe is incorrect.

We recommend connecting with a cryptocurrency tax professional with further questions on how to appropriately respond to CP2000 as situations can vary from person to person.‍

How crypto tax software can help 

Crypto tax software can help you generate comprehensive crypto tax forms in minutes. 

With a platform like CoinLedger, you can import transactions from exchanges like Coinbase and wallets like MetaMask. This gives the platform a complete view of your cryptocurrency transactions. 

You can simply give these forms to your accountant so that they can properly amend your previous tax returns with them, import them into popular tax filing software like TurboTax, or you can use them to amend your tax returns yourself.