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received IRS notice CP162A, "Failure to file penalty"

I started 2 LLC's in 2020 (partnership), and filed Form 1065 for both in 3/2021 and 3/2022, by "turbotax business". I have screen shots supporting successful submission and acceptance of both tax-filling in both years. 

 

then received notice CP162A with tax period "4/30/2021", stating "8months late", asking for penalty of $210 per partner per month.

then another CP162A for the other LLC for tax period "11/30/2021". stating "1month late". asking for penalty of same $210 per partner per month. 

I have no idea what I was late for, and why the second notice has a different tax period and "1 month late". 

I tried to call IRS, everyday for the past 4 weeks, I always got "I am sorry Due to extremely high call volumes, we are not able to handle your call today. please try again another day". 

the IRS website is not very helpful on what I was late for. 

any of you have similar issues? 

thank you for the attention. 

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13 Replies

received IRS notice CP162A, "Failure to file penalty"

Is the Partnership's tax year something other than the calendar year?   Form 1065 is due on the 15th day of the third month after the end of the partnership's tax year.

received IRS notice CP162A, "Failure to file penalty"

we dissolved both LLC's in year 2021 (4/2021 and 11/2021).

"1065 instruction" states, 

"When To File
Generally, a domestic partnership must file
Form 1065 by the 15th day of the 3rd month following the date its tax year ended as
shown at the top of Form 1065. For calendar
year partnerships, the due date is March 15."

 

is the due date for filing Form 1065 on Terminated partnerships different? Is it not "calendar year"? 

 Thank you so much! 

received IRS notice CP162A, "Failure to file penalty"

The partnership’s tax year ends on the date of termination, which is the date the partnership winds up its affairs.

 2021 Instructions for Form 1065 (irs.gov) at page 4 (Termination of the Partnership).

 

It's unfortunate that you did not have expert help when doing the terminations.

received IRS notice CP162A, "Failure to file penalty"

sigh, lesson learned, in a hard way. $4000! 

I am not sure IRS can be as forgiving as other customer service and waive or reduce this "penalty". 

received IRS notice CP162A, "Failure to file penalty"

@apple-Sweet-z 

Don't give up quite yet.

Draft a response letter to the IRS indicating that you were not aware of a change in the filing date when you terminated the LLC's.

Indicate you are just a small business that wasn't able to afford professional consulting fees and did in fact file both returns as required based on a normal due date.

Also indicate that all member's received their K-1's timely in order to prepare their individual tax returns.

Conclude by indicating that there was no intent to avoid or evade any filing responsibility; it was merely not understanding that when the LLC terminated other than at the end of the year, the filing date changed.

Then ask that the IRS respectfully consider abating the penalties.

Send the letter, a copy of the notice and send it certified mail return receipt requested.  This is important and is you insurance policy that the response was received.

*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.

received IRS notice CP162A, "Failure to file penalty"

thank you so much. 

I found Form 843, Claim for Refund and Request for Abatement

should I write to IRS together with this form, or just a letter with copy of notice CP162A? 

since both LLC's are in the same situation, I assume the 2 notices and letter can be placed in the same mail, right? 

 

received IRS notice CP162A, "Failure to file penalty"

@apple-Sweet-z 

Just send a letter with a copy of your notice.

I recommend a separate letter for each notice.

Include each letter and notice in the same envelope.

Make sure you identify each LLC on the appropriate letter (using the EIN).

Also make sure you keep a copy of the letters and notices for your records as well.

And the most important piece, is to send certified mail return receipt requested.

*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.

received IRS notice CP162A, "Failure to file penalty"

Thanks @Rick19744, for the suggestion. Helpful to my situation as well. As far as sending a letter to IRS goes, is there a specific address I should use? I ask because we are a small LLC as well so want to make sure the letter gets to the appropriate mailbox.

 

Best

received IRS notice CP162A, "Failure to file penalty"

@BhoomiReal 

There should be an address on the notice.  Use that.

 

*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.

received IRS notice CP162A, "Failure to file penalty"

Thank you!

received IRS notice CP162A, "Failure to file penalty"

I got CP261 mentioning the start of S-corp from next year because of late filing. 

I sent my details via fax after 3 days mentioning why I need the S-corp status from June this year. 

 

Should I send a certified mail too? 

Is there any difference in response time when you reach out to IRS via fax or postal mail?

 

 

 

received IRS notice CP162A, "Failure to file penalty"

@hminnesota  A couple of thoughts here:

  • The IRS uses multiple fax numbers, and as a result, they go to multiple offices.
  • I have no idea if the fax number you used goes to the same office that mail would go to.
  • Obviously a fax will be received quicker, but response time is no quicker.  Hopefully you have a verification that the fax went through.
  • Since you are dealing with the start of a new S corporation, I would recommend that you meet with a tax professional.  This individual can verify that what you have done is correct and get you started on the right path in your initial year.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.

received IRS notice CP162A, "Failure to file penalty"

Thank you!.

I do have confirmation that the fax went through. 

But, based on your points, I will send certified mail as well to the address mentioned in the letter. 

 

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