IRS CP162 Notice: Partnership / S-Corp Late Filing Penalty
A CP162 notice charges a penalty because a partnership (Form 1065) or S corporation (Form 1120-S) return was filed late, was incomplete, or wasn't e-filed when required — the penalty runs per partner or shareholder, per month, for up to 12 months.
Deadline calculator
The CP162 clock runs from the date printed on the notice — not the day you opened it.
Estimate only, based on the standard 21-day CP162 window. Your notice controls — always use the specific date printed on it.
What a CP162 actually means
The math is what makes CP162 penalties shocking: the IRS charges an inflation-adjusted amount (over $200) for each partner or shareholder, for each month or part of a month the return was late, up to 12 months. A three-partner LLC that files its 1065 four months late is looking at a penalty north of $2,500 — on a return that often shows no tax due at all, since partnerships and S-corps pass income through to their owners.
The good news: this is among the most abatable penalties the IRS assesses. First-time abatement wipes it if the entity has a clean three-year filing history. Small partnerships (10 or fewer individual or estate partners) have a long-standing IRS relief position when all partners reported their shares on timely personal returns. And reasonable cause — illness, records destroyed, reliance on a preparer who dropped the ball — is argued successfully every day. Paying a CP162 without at least requesting abatement is leaving money on the table.
What to do, step by step
- 1Confirm the facts: when the return was actually filed (or e-file accepted), how many partners/shareholders the IRS counted, and how many months it's charging.
- 2If the return still hasn't been filed, file it now — the penalty grows every month until it caps at 12.
- 3Check first-time abatement: if the entity filed and paid cleanly for the prior three years, one call or letter can remove the entire penalty.
- 4For small partnerships, invoke the small-partnership relief position if all partners timely reported their shares of income on their own returns.
- 5Otherwise, request reasonable-cause abatement in writing with documentation — and going forward, file an extension (Form 7004) by the deadline, which makes this penalty impossible.
Common questions
How much is the CP162 penalty?+
An inflation-adjusted amount per partner or shareholder (over $200 as of recent years) multiplied by each month or partial month late, capped at 12 months. The count multiplies fast: five owners × six months late is thirty penalty units. The exact per-unit figure for your year is printed on the notice.
The partnership owed no tax — why is there a penalty at all?+
The late-filing penalty for pass-through entities is based on the failure to file the information return, not on tax due. The IRS's position is that late 1065s and 1120-S returns delay everyone's K-1s and personal filings. That's also why the penalty is charged per owner.
How do I get a CP162 penalty removed?+
Three routes, in order of ease: first-time abatement (clean compliance history for the prior three years — often granted with one phone call); small-partnership relief (10 or fewer qualifying partners who all timely reported their shares); and reasonable cause (a written explanation with documentation showing ordinary business care). Don't pay first — abatement is easier to get than a refund.
What if my return was on time but the IRS says it wasn't?+
Prove it: e-file acceptance confirmation, certified-mail receipt, or postmark records. Respond to the notice with the proof — timely-mailing rules mean a return postmarked by the deadline is timely even if the IRS processed it weeks later.
Checked against IRS primary sources — see how we source these guides. You can verify any notice directly at IRS.gov. The dates and instructions printed on your specific notice always control.
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