The CP259 is the business equivalent of the CP59. The IRS expected a business tax return from your entity and didn't receive one. This applies to partnership returns (Form 1065), S-Corporation returns (Form 1120-S), corporate returns (Form 1120), employment tax returns (Form 941/940), and other business information returns.
Why You Got This Notice
The IRS tracks businesses that have filing obligations. If your entity has an EIN and the IRS expects a return based on prior filing history or entity classification, they send a CP259 when the return doesn't show up.
Common reasons include the return was filed but the IRS didn't process it, the return was sent to the wrong address, the entity changed its fiscal year, the entity closed but you didn't file a final return, or you simply forgot to file.
The Penalties
Late-filed partnership and S-Corp returns carry a penalty of $235 per partner or shareholder per month, up to 12 months. A five-member LLC that files six months late owes $7,050. These penalties apply even if the return shows zero tax due, because the penalty is for the late information return, not for unpaid tax.
If you're an employer with unfiled 941s, the consequences are more severe. Unpaid employment taxes can trigger the Trust Fund Recovery Penalty, which makes you personally liable for the withheld amounts.
What to Do
If the business is still operating, file the return immediately. If the return was already filed, send a copy to the address on the CP259 with proof of original filing. If the business has closed, file a final return marking it as such to stop future notices.
After filing, request penalty abatement through First-Time Abatement or reasonable cause. Many CP259 penalties are abatable, especially for small businesses that missed a deadline due to circumstances beyond their control.
If you've received a CP259, call us at (813) 229-7100. We file late business returns and request penalty abatement regularly.