What This Notice Means

A CP162E means the IRS charged a penalty against your partnership or S corporation for one of these reasons:

  • The return was late.
  • The return was incomplete.
  • The partnership tracking report wasn't filed.
  • The return wasn't filed electronically as required.

For this penalty, a Real Estate Mortgage Investment Conduit (REMIC) is treated as a partnership, and its Form 1066 is treated as a partnership return.

What to Do

If the penalty is right, pay it in full by the date on the notice. That keeps more interest from piling on.

If the return was missing information, file it with the IRS office where you filed the return as soon as you can. This penalty grows each month the information is missing, up to 12 months, and it's multiplied by the number of partners or shareholders. Every month you wait costs money.

If You Disagree

A partner or corporate officer with authority, or someone they authorize on Form 2848, can call the number on your notice. Have your proof ready:

  • For a late filing penalty when the return was on time: proof of a timely extension or timely mailing, which you may be asked to fax.
  • For a missing-information penalty: an explanation of why the information wasn't required by the return instructions.
  • For an e-file penalty: a copy of your waiver or proof of the number of partners during the year.

Asking for Penalty Relief

If the penalty was correctly charged, reasonable cause can still get it removed. Mail a written explanation to the IRS office where you filed. For missing information, include the information and sign the explanation under penalty of perjury.

A partnership with 10 or fewer partners may qualify under Revenue Procedure 84-35 for the late filing or missing-information penalty. Every partner must be a natural person (not a nonresident alien) or an estate, every partner's share of each item must be the same, the partnership can't have elected into the consolidated audit proceedings rules, and all partners must have reported their shares on timely returns. If that fits, return the notice with a signed statement under penalty of perjury.

Don't stretch the facts. A materially false statement brings the penalty back and can add a false statement penalty.

If you got a CP162E for your partnership or S corporation and want the penalty fought, call us at (813) 229-7100.