Understanding Your CP162A Notice

Reasonable cause for failure to file a timely and complete partnership return will be presumed if the partnership (or any of its partners) is able to show that all of the following conditions have been met:

• The partnership had no more than 10 partners for the taxable year. (A husband and wife filing a joint return count as one partner.)
• Each partner during the tax year was a natural person (other than a non-resident alien), or the estate of a natural person.
• Each partner's proportionate share of any partnership item is the same as his proportionate share of any other partnership item.
• The partnership did not elect to be subject to the rules for consolidated audit proceedings under Internal Revenue Code (IRC) Section 6221 through 6234.
• All partners reported their distributive share of partnership items on their timely filed income tax returns.

If all of the above conditions are met, you may return this notice with your statement, signed under penalty of perjury, that you qualify to have the penalty removed for reasonable cause under the provisions of Rev. Proc. 84-35.

The penalty can be reasserted if it was removed based on a statement with respect to Rev. Proc. 84-35, and it is later determined that such statement was false in any material respect. Additionally, a penalty for making false statements may be asserted under IRC Section 7206.

You May Want To

Take necessary steps to prevent a similar penalty in future years.