IRS letters › CP162
Notice CP162
Penalty for a late or incomplete partnership or S-corporation return
A penalty for filing Form 1065 or 1120-S late or without required information. It's charged per partner or shareholder, per month.
What it means
Partnerships, including multi-owner LLCs, and S corporations owe a penalty for each month the return is late (up to 12 months), multiplied by the number of partners or shareholders. A two-owner LLC that forgets Form 1065 for a year can owe several thousand dollars even when no tax is due.
What to do
- If this is the company's first penalty in three years, ask for first-time penalty abatement by phone or letter.
- If there was a good reason, such as illness or a disaster, ask for reasonable-cause relief and explain it.
- Small partnerships with 10 or fewer partners may qualify for relief under an older IRS rule (Revenue Procedure 84-35). Ask a professional.
- File any missing return right away. The penalty stops growing once it's filed.
Don't
- Don't just pay it if you might qualify for abatement. Ask first.
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The law behind it
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General information, not tax or legal advice. Always follow the dates and instructions printed on your own notice.