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. 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. See TC 166, TC 240 and TC 246. 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.

What to do next

Start by reading which ground the notice actually charged, before screening any relief. This notice can carry an e-filing failure as well as a late filing, and the two do not share a relief path — so the screen that is right for one is wrong for the other.

For a late filing, screen First-Time Abate first: it is available 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.

For an e-filing failure, the answer turns on entity type. A partnership that fails to e-file when required is deemed by Treas. Reg. §301.6011-3(c) "to have failed to file the return in the manner prescribed for purposes of the information return penalty under section 6721" — which puts the charge outside First-Time Abate entirely, since FTA's eligible-penalty list at IRM 20.1.1.3.3.2.1, paragraph (1), runs only to §§6651(a)(1)/6698(a)(1)/6699(a)(1), §6651(a)(2)-(3) and §6656, and never mentions §6721. It is outside Automatic Exemption from Penalty for the same reason. Reasonable cause on that charge is judged under the stricter §6724 standard, and the waiver route is a written "Form 1065 e-File Waiver Request" to Ogden — not Form 8508, which covers information returns only. CP162 documents that partnership rule in full.

An S corporation in the identical situation lands somewhere else. The parallel regulation, Treas. Reg. §301.6037-2(c), deems the corporation "to have failed to file the return" without routing it to §6721, pointing instead to §6651, with reasonable cause evaluated under §301.6651-1(c). So the regulation treats an S corporation's e-filing failure as a failure to file. The IRS has not said whether First-Time Abate or AEP reaches it, while the same-sounding failure on a partnership return is not reachable by either. The rule worth remembering: the regulation treats a partnership's e-filing failure like a missing information return and an S corporation's like a missed deadline. CP162B sets the two regulations side by side for an entity holding a notice that charges both grounds at once.

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. To claim it, return the notice with a statement, signed under penalty of perjury, that the partnership qualifies. 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 people mistake CP162A for

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 partnership filed its return; CP162A is about when the entity 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. The notice describes Rev. Proc. 84-35 relief for a small partnership, and IRM 20.1.2.6.3 confirms the limit: this relief "does NOT apply to S corporations." An S corporation that reads the small-partnership paragraph on its own CP162A as applying to it is wrong.

Common Questions