Help! Got CP162 notice for late LLC partnership return - filed on time with zero income. What are my options?

This is actually a pretty common issue with partnership returns. Even if you have zero income, partnerships (including LLCs taxed as partnerships) are still required to file Form 1065 every year they exist. The penalty for late filing is calculated per partner per month late, which explains the $1,680 amount (likely $210 per partner per month). The good news is that you have options. First, check when you actually filed the return and gather proof of timely filing (if available). If you did file late, you can request a First-Time Abatement if you haven't had any penalties in the past three years. Alternatively, you can request abatement due to "reasonable cause" by explaining the circumstances and why you believed filing wasn't necessary due to no income. You should respond to the notice directly using the contact information provided. The IRS generally gives you 60 days to respond, but your November 8th deadline is approaching quickly. Include any supporting documentation you have. The response should come from the LLC since the notice is addressed to the business.

After dealing with a similar CP162 nightmare last year (got hit with $2,100 in penalties for my research LLC), I found this AI tax document review service at https://taxr.ai that saved me thousands. I uploaded my CP162 notice, and it immediately flagged that I qualified for penalty abatement under reasonable cause. It generated a customized response letter explaining exactly why my situation qualified for relief under IRS guidelines. The system analyzed my specific circumstances and identified the exact IRS rules that applied to my situation. It even cited the relevant Internal Revenue Manual sections that the IRS agents use to evaluate penalty abatement requests. My penalty was completely removed within 3 weeks of sending the letter they helped me create.

Just wanted to follow up about my experience with taxr.ai after I decided to try it despite my initial skepticism. I uploaded my CP162 notice and answered their questions about my LLC situation (similar to yours - formed for a specific project with minimal activity). The system immediately identified that I qualified for reasonable cause abatement based on my circumstances and lack of previous filing issues. It generated a response letter that referenced specific IRS policies about penalty relief for partnerships with no tax liability. The letter was amazingly detailed and professional - definitely not something I could have written myself. I sent it in last month and just got confirmation yesterday that my entire $1,470 penalty was abated! The IRS response even referenced the specific reasonable cause arguments from the letter. Really glad I gave it a shot instead of just paying the penalty.

Speaking from experience dealing with the IRS about partnership penalties, you'll likely need to call them to get this fully resolved. Problem is, good luck getting through! I spent 4+ hours on hold multiple times before giving up. I finally used https://claimyr.com to get through to an actual IRS agent about my CP162 notice. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically hold your place in line and call you when an agent picks up, saving hours of hold time. The agent I spoke with immediately recognized my situation as eligible for abatement since my LLC was primarily formed for grant applications with minimal activity. It was such a relief to actually speak with someone who could look at my file in real-time and confirm I was eligible for penalty relief. They even annotated my account with notes about our conversation.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway since my situation with a CP162 notice was getting desperate (deadline approaching and couldn't get through to the IRS). The service worked exactly as described - they held my place in line, and I got a call back when an IRS agent was on the line. The agent I spoke with reviewed my partnership situation and immediately identified that I qualified for First-Time Abatement since I had no previous penalties. She submitted the abatement request during our call and gave me a confirmation number. I just checked my account yesterday and the entire $1,890 penalty has been removed! What would have taken weeks through written correspondence was resolved in a 15-minute phone call. Being able to explain my situation directly to a human made all the difference - the agent actually understood that our partnership was formed solely for a specific project with no revenue.

Don't overlook checking if you possibly filed Form 7004 (extension request) for your partnership return! When I got my CP162, I initially panicked thinking we filed late, but then realized our accountant had filed an extension that gave us until September 15th rather than the standard March 15th deadline. If you did file an extension, make sure the IRS properly processed it. Sometimes they issue these notices when they don't have the extension recorded in their system. You can request your "account transcript" from the IRS which will show whether an extension was recorded.

Has anyone actually fought one of these CP162 notices and WON without paying anything? I'm in almost the exact same situation with my research partnership LLC. We formed it in 2020 for an NSF SBIR grant application, have had zero income, and just got hit with a $2,100 penalty. I'm wondering if I should just pay it to avoid further issues or if it's worth fighting.

I went through this exact situation last year with my research LLC! Got a CP162 for $1,470 even though we had zero income and I was certain we filed on time. Turns out there was a processing error on the IRS side - our return was received but not properly recorded. Here's what worked for me: I gathered all my documentation (proof of timely filing from our accountant, copies of certified mail receipts, etc.) and submitted a written reasonable cause request. I emphasized that the LLC was formed solely for grant applications, had no income or business activity, and that we genuinely believed we had fulfilled all filing requirements. The key is to be very specific about your circumstances. Mention that it's an NSF grant application vehicle, detail your minimal expenses, and stress that this is your first penalty issue. I also included a timeline showing when we filed versus the deadline to demonstrate our good faith effort to comply. It took about 6 weeks, but they completely abated the penalty. Don't just pay it - you have legitimate grounds for relief based on what you've described. The IRS is actually pretty reasonable about these situations when you can show it was a genuine misunderstanding rather than willful non-compliance.