Why did my business receive an IRS CP162A?

If you recently opened your mail to find IRS CP162A for your business in Maryland, you are likely wondering: what does it mean and what should I do? For Maryland pass-throughs—S corporations and partnerships—this notice usually means the return was late or the IRS says it should have been e-filed but wasn’t. Both can lead to significant penalties and ignoring it can add interest fast.

Here are the key steps business owners should take now:

1) Confirm why you got it.

• Read the notice for the tax year and reason. CP162A is triggered when a partnership (Form 1065) or S corporation (Form 1120-S) filed late or failed to meet required e-filing rules (for example, large partnerships generally must e-file). The penalties assessed can be hefty, especially if there are many owners.

• Timing matters. Many CP162A letters are issued by the IRS in spring/summer after the March S corp/partnership deadlines.

2) If the penalty is correct:

• Consider your options, such as potential abatement. Looping in a tax professional early can be beneficial to identify best options for your situation.

• Do not procrastinate. The notices generally specify a "pay-by-date." Evaluate your payment options and be mindful of interest on the assessed penalties, which can accrue quickly. Again, a Maryland tax resolution expert can help you navigate these properly.

3) If you believe it’s wrong, respond the right way.

• Filed on time? Gather proof (timely extension, e-file acceptance, or certified mail) and contact the IRS using the number on the notice to request correction. You may also work with a tax professional who may be able to expedite this process and speak with the IRS on your behalf.

• Missed e-file but qualified for an exception? Gather evidence and connect with a tax pro to discuss options.

• Small partnerships may qualify for relief—if strict conditions are met. If you need help determining if you are eligible for relief, it is advisable to work with a Maryland tax accountant that specializes in tax representation for businesses.

4) Know when to call a pro.

• If you have multiple notices, complex ownership, prior late filings, Maryland pass-through tax elections, or payroll/sales tax issues layered on top, get help. An experienced small business accountant in Maryland can coordinate federal CP162A resolution with Maryland filings, including PTE returns and any composite or PTE tax elections.

• Aventa Tax helps business owners with IRS and state tax notice help and representation.

Prevent this next year

These notices don't just go away. Take action to help prevent these notices from being issued again. You can do the following:

• Track S corporation/partnership deadlines and file extensions early.

• E-file every eligible return.

• Align federal and Maryland filings, including estimated taxes and Maryland sales and use tax where applicable.

• Use Aventa Tax for proactive planning and Maryland small business tax preparation so that filings (1120S, 1065) can be handled in a timely and efficient manner.

If you received a CP162A, Aventa Tax can review the notice, determine the best resolution path, and respond quickly. For business IRS tax help in Montgomery County, Maryland call 301-235-2724 or learn more about our business tax resolution services. We’ll help you address the IRS letter and keep your business tax filings on track.

Disclaimer: This information is for educational purposes only. Please consult a tax professional for specific advice on your situation.