CP162A: What It Means and How to Respond

What the notice actually says

CP162A tells the entity: "We charged you a penalty because: your partnership or S corporation return was late or, you didn't file your return electronically, as required." Both grounds can appear on the same notice, and it is the IRS's only per-code notice for this specific failure type that reaches both entity types — a partnership return is penalized under IRC §6698, an S corporation return under IRC §6699, with identical structure and dollar amounts.

The penalty is $255 per partner or shareholder, per month or part of a month the return was late, capped at 12 months, for any return required to be filed in 2026 (Rev. Proc. 2024-40). A four-owner entity filed a full year late faces up to $255 × 4 × 12 — $12,240 — before any relief is applied.

What actually triggered it

The return posted after its due date (including extensions), and the number of partners or shareholders during the year drives the total. On the transcript, a late-filing assessment under this notice generally posts as a TC 240 or TC 246 with penalty reference number 722 for returns filed in 2022 or later; older accounts may instead show a plain TC 166 without a reference number. None of these codes has its own page in this library yet — they belong to a different family than the TC 160/161/167 codes that cover the individual/entity income-tax late-filing penalty.

Response deadline and what happens if you miss it

The notice states a payment due date and, because the penalty accrues month-by-month, the exposure keeps growing for as long as the return stays unfiled — up to the 12-month statutory cap. There is no separate appeal window stated on the notice itself; a relief request can generally be filed any time after the assessment, but the penalty and any resulting interest continue to run in the meantime.

The practitioner's actual next step

Screen First-Time Abate first — it is available for the late-filing penalty under both §6698(a)(1) and §6699(a)(1), provided the same return was filed on time for the prior three years and the entity carries no other unresolved penalty on that lookback. Administrative waivers like FTA are considered before reasonable cause, not after.

If the entity is a partnership (never an S corporation — see the differentiation below), also check Rev. Proc. 84-35: ten or fewer partners, each an individual or a deceased partner's estate, each allocated income in the same proportion as every other item, and each reported their share on a timely-filed return. If neither administrative relief fits, reasonable cause is available under the plain text of both §6698(a) and §6699(a) — but the IRS will not find it as long as the return remains unfiled, so filing it is the first step in any relief request, not an afterthought.

What CP162A gets confused with — and why the distinction matters

The most consequential mix-up is treating CP162A as the S-corp counterpart to CP162. It is not — CP162A reaches both partnerships and S corporations, and the two notices actually split on what went wrong, not on entity type: CP162 is about how the return was filed; CP162A is about when it was filed (or, again, how). A partnership that files on time but on paper could receive either notice depending on how the failure is coded — reading the notice's own stated reason, not its number, is what tells you which penalty and which relief rules actually apply.

The second trap is specific to S corporations: this notice's own text describes Rev. Proc. 84-35 relief without limiting it to partnerships, but the IRS's underlying penalty manual is explicit that this relief "does NOT apply to S corporations." An S corporation reading its own CP162A and assuming the small-partnership relief on the page applies to it would be relying on a real gap in the notice's own wording.

Common Questions