What this notice means
The IRS added a penalty to your partnership or S corporation account. The basic CP162 is for a return that wasn't filed electronically as required. The CP162A, B, C and E versions can also cover a late or incomplete return or a missing partnership tracking report.
For missing required information, the penalty is a set amount for every partner or shareholder the business had at any point in the year, for each month the information is missing, for up to 12 months. The IRS adjusts that amount for inflation.
Why you got it
- The partnership had to file its return electronically but didn't.
- The partnership or S corporation return was filed late.
- The return was missing information that the form's instructions say is required.
- The partnership didn't file its partnership tracking report.
What to do now
- Read your notice to see which penalty the IRS charged and why.
- If you agree, mail the full payment by the date on your letter to avoid more interest.
- If you think the penalty is wrong, an authorized officer or partner can call the IRS at 800-829-0922. That includes an e-file penalty when the partnership had fewer than 101 partners or a waiver, a late filing penalty when the return was filed on time, or a missing information penalty when the information wasn't required. Have your proof ready.
- If the penalty is for missing information, send that information as soon as you can. The penalty keeps growing until the IRS gets it, for up to 12 months.
- If there was reasonable cause, mail a written explanation asking the IRS to remove the penalty to the office where you filed the return. For missing information, include the missing details and sign the explanation under penalty of perjury.
- A partnership with 10 or fewer partners may qualify for relief under Revenue Procedure 84-35 if it meets every condition the IRS lists.
If you don't respond
Interest is added if you don't pay in full by the date on your letter. A penalty for missing information keeps growing each month until the IRS receives it, for up to 12 months.
Questions people ask
What information has to be on the return?
Anything the return's instructions list as required information.
What if we can't get the missing information through no fault of our own?
Send a written explanation and ask the IRS to waive the penalty for reasonable cause.
Who is allowed to call the IRS about this?
For a small partnership with no designated tax matters partner, any partner can call. Otherwise it's the tax matters partner or someone they authorize on Form 2848. For a corporation, it's an officer who can sign for it or someone the chief officer authorizes on Form 2848.