CP162B Notice Guidance

We acknowledge the complications of tax regulations businesses encounter in adhering to them at Dimov Tax. We offer clear guidance and support serving as your reliable consultants in deciphering the nuances of tax legislation. On this page, we shed light on the CP162B Notice, address its implications effectively and offer insights and guidance to help you understand. 

What is the concept?

Internal Revenue Service (IRS) issues the CP162B Notice to notify partnerships and S corporations of penalties imposed since incomplete returns or failure to file electronically as required. If a notice was received, it is important to take immediate action to avoid additional interest charges and ensure compliance with IRS regulations.

The Actions

It is very important to promptly make your full payment by the specified deadline in case you acknowledge the penalties mentioned in the CP162B Notice. Taking this proactive step would help minimize any additional financial consequences.

However, some actions could be taken to resolve the matter if it is likely that the penalty was unfairly assessed:

• Engage with the IRS: Contacting an authorized officer or partner to communicate with the IRS would be a solid option.
• Provide Documentation: Depending on the situation, supporting documents or explanations to back up the case might be presented.

Meeting specific criteria is crucial for effectively challenging the charges for penalties concerning failure to file electronically or incomplete returns. Understanding these criteria and presenting pertinent evidence can bolster your position in discussions with the IRS.

Revenue Procedure 84-35: A Path to Resolution

Revenue Procedure 84-35 offers a potential avenue for relief from penalties under specific conditions. You may be eligible to have the penalty removed for reasonable cause if your partnership meets certain criteria outlined in this procedure.

These conditions may be listed as below:

1. The partnership had no more than 10 partners in the taxation year. (A married couple filing jointly is considered as one partner.)
2. Each partner during the tax year was an individual (excluding non-resident foreigners) or the estate of an individual.
3. Each partner’s share of partnership items was proportionate and consistent across all partnership items.
4. The partnership did not opt for consolidated audit proceedings under Internal Revenue Code (IRC) Section 6221 through 6234.
5. All partners accurately reported their distributive share of partnership items on their income tax returns filed on time.

It’s important to note that if the penalty was waived based on a false statement regarding Rev. Proc. 84-35, it might be reinstated. In addition, false statements may lead to penalties under IRC section 7206.

In a Nutshell

Some important points could be underlined related to the CP162B Notice to provide further clarity:

• Required Information in the Return: Ensuring compliance with IRS instructions by including all required information listed in the return instructions is vital.
• Penalty for Noncompliance: Failure to include required information may result in penalties of $210 per person for each month the information remains missing, for up to 12 months. Penalty rates are adjusted for inflation and are published at least annually via the Internal Revenue Bulletin and in return instructions before they take effect.
• Obtaining Missing Information: If it is not possible to obtain the missing information through no fault of the individuals, you have the option to provide a written explanation along with a request for a waiver of the penalty on the grounds of reasonable cause.

It should be considered that authorized individuals vary based on the entity type when communicating with the IRS. It is crucial to adhere to IRS regulations during any interactions with the agency.

Partner with Dimov Tax & CPA Services for Expert Tax Assistance

If a Notice CP162 was received, it is certainly advisable to consult an experienced tax professional who would determine if the partnership or s corporation qualifies for a penalty abatement and could represent in further communications with the IRS. Potential financial risks should be minimized and our team of seasoned experts is dedicated to ensuring compliance with tax laws.

The stated tax challenges may derail the success of the business. Experience peace of mind knowing that your tax matters are in capable hands and Partner with Dimov Tax today. You may proceed to schedule a consultation with our experts and contact us now to learn more about our comprehensive tax services.