What This Notice Means
CP406 goes to plan sponsors when IRS records show an employee benefit plan is still active but no Form 5500 series return was filed for a plan year. It's the second and final delinquency notice. The first is CP403, which the IRS generally sends about 15 months after the return due date. If there's no response, CP406 follows 12 weeks later.
The notice covers Form 5500, Form 5500-SF and Form 5500-EZ, the annual return for one-participant retirement plans, such as a plan that covers only a business owner and spouse. A response is required.
What to Do
The notice has separate sections for different situations. Pick the one that fits.
- You already filed. Complete Section I. Check that the EIN, plan number and plan year on the notice match what you filed, and note any differences. This includes a return filed under a different sponsor name, EIN or plan name.
- You weren't required to file. Complete Section II. That includes a plan that filed a final return in an earlier year.
- You were required to file and didn't. File the late return electronically through EFAST2. If you have reasonable cause for filing late, complete Section III with your explanation.
Mail or fax your response to the address or fax number on the notice. If you send a paper copy of an unprocessed Form 5500, the IRS will send it back and tell you to file electronically.
Penalties
Filing the late return may lead to a penalty notice. Be ready to show the return was filed on time or to give a reasonable cause statement asking that the penalty not be assessed. If you complete Section III and the IRS accepts your reasonable cause statement, it marks the account to prevent the IRS penalty.
Keep copies of everything you send and the proof of when you sent it.
If you received a CP406 notice about an unfiled Form 5500, call us at (813) 229-7100.