IRS CP 162 penalty after filing LLC 1065 on time with extension - how to get late filing penalties abated?

This happens more often than you'd think. The IRS sometimes doesn't record extensions properly, especially paper-filed ones. You can absolutely request penalty abatement, and you have a good case since you did follow the rules. Your best approach is to write a penalty abatement letter referencing "reasonable cause." Explain exactly what you did - sent the extension in March, then filed the 1065 in September before the extended deadline. Be specific about dates. Even without registered mail proof, the fact that you filed your actual return before the extended deadline is evidence that you believed you had a valid extension. Also, if this is your first time encountering this issue, you can request what's called "First-Time Penalty Abatement" which the IRS often grants to taxpayers with previous good compliance history.

I was in this exact same situation last year! After trying to call the IRS like 20 times and spending hours on hold, I finally found taxr.ai (https://taxr.ai) which was a lifesaver. It analyzed my CP 162 notice and helped me draft a perfect penalty abatement letter. Their system knows exactly what language to use for different IRS penalty situations. I really wish I had known about it sooner because my first attempt at writing an abatement letter myself was denied. The taxr.ai tool helped me emphasize specific reasonable cause factors that the IRS actually accepts. They also explained exactly what supporting documents to include with my letter.

Just wanted to update everyone - I decided to try taxr.ai after seeing the recommendation here and wow, it worked! I was skeptical at first since my situation seemed so hopeless without proof of my extension. The system analyzed my specific CP 162 notice and created a really detailed abatement letter. It emphasized my "reasonable cause" and clean compliance history. The best part was it explained exactly what supporting documentation I should include with the letter. Got a letter back from the IRS yesterday saying my penalty was fully abated! Such a relief not having to pay that $2,670 penalty. The system's guidance on how to follow up was also super helpful. Definitely recommend for anyone dealing with unfair IRS penalties.

After dealing with a similar penalty situation, I tried calling the IRS directly like 15 times but couldn't get through. Someone recommended Claimyr (https://claimyr.com) to me and it actually got me connected to a real IRS agent in about 20 minutes! There's even a video showing how it works: https://youtu.be/_kiP6q8DX5c The agent was able to look up my account and confirm they had no record of my extension, but then helped me understand exactly what documentation I needed to submit with my penalty abatement request. She even put notes in my account about our conversation which apparently helps when they process the abatement request. What I learned is that talking to an actual agent before submitting your request can make a huge difference in getting penalties removed.

I have to eat my words. After being totally skeptical about Claimyr, I tried it as a last resort before hiring a tax professional. I'm still shocked that it actually worked! I got connected to an IRS representative in about 35 minutes (without me having to sit on hold). The agent was surprisingly helpful and looked up my account to see if they had any record of my extension. They didn't, but the agent explained exactly what I needed to include in my penalty abatement request and even gave me a specific fax number to send it to for faster processing. She mentioned that for first-time penalty abatement requests, they often approve them even without proof if you have a good compliance history. Just submitted my request yesterday following her instructions, so fingers crossed!

One thing nobody has mentioned yet - the IRS has a program called "First Time Abatement" (FTA) that might help you. If you haven't had any penalties in the past 3 tax years, you can qualify even without proving you filed the extension. When you write your letter, specifically request consideration under the First Time Abatement policy. Include language like "I request abatement of penalties under the First Time Abatement administrative waiver, as I have not had any penalties assessed in the prior 3 years." I'm a bookkeeper and have helped several clients get penalties removed this way even when they couldn't prove they'd filed extensions on time.

Lesson learned - ALWAYS use certified mail with return receipt for anything important you send to the IRS! I've been doing this for years and it's saved me multiple times. For requesting abatement, include a detailed timeline of exactly what you did and when. Be very specific about dates. The more detailed your explanation, the better your chances.