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Notices from IRS (CP 403 and CP 406 Notices) - Delinquency Notices

The CP 403 and 406 Notices are delinquency notices for Form 5500-series returns. These FAQs will help you draft a response if you receive a notice.

Also see the Form 5500 Corner.


These FAQs provide general information and shouldn’t be cited as legal authority. They provide general information, and your situation may require additional research.


  1. Why was this notice sent?
  2. Why are CP 403 and 406 Notices for Forms 5500 generated?
  3. What should I do upon receiving a CP 403/406 Notice?
  4. What if the EIN, Plan Name or Plan Number on the copy of the return does not match the Notice?
  5. What should I do if the CP 403/406 Notice was sent by mistake?
  6. What if I receive a notice even though I filed a final Form 5500 return in a previous year?
  7. What if I am exempt from filing a Form 5500 and filed incorrectly in the past?
  8. Who is responsible for the Form 5500 series filing?
  9. Can I get an extension of time to reply to the CP 403/4065 Notice?
  10. What are the penalties on late-filed or incomplete returns?
  11. Is there any way to reduce Form 5500 late filer penalties?
  12. Who should I contact with questions about a CP 403/406 Notice?
  13. Where should I send replies to CP 403/406 Notices?

 


 

Why was this notice sent?

These notices are sent to filers who did not file a Form 5500-series return for a particular plan year and our records indicate the plan is still active.

 

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Why are CP 403 and 406 Notices for Forms 5500 generated?

The CP 403 and CP 406 Notices are requests for a missing or non-filed Form 5500 or 5500-SF. They are not bills.
 

The CP 403 Notice is mailed to the filers 20 months after the original due date of the return. This allows enough time for the Department of Labor to process timely filed returns. The CP 403 has a 30-day response requirement. If the IRS does not receive a response by the response date, a Final Notice (CP 406) is mailed 12 weeks after the CP 403.
 

The CP 406 Notice also has a 30-day response date. Responses must be received within 30 days to prevent further account action.

 

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What should I do upon receiving a CP 403/406 Notice?

  1. Review your records to determine if a Form 5500/5500-EZ/5500-SF was filed.
  2. Review the copy of the filed return to ensure that the EIN, plan name and plan number on the copy of the return match the notice received.
  3. If you filed your Form 5500 return within the last four weeks and used the name, EIN and plan number shown on the notice, then you may ignore the CP 403 Notice. However, if you receive a CP 406 Notice, you must respond by returning the CP 406 Notice with Section I completed.

    .

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What if the EIN, Plan Name or Plan Number on the copy of the return does not match the notice?

Submit these documents to the address indicated on the notice:

  1. A copy of the CP 403/406 Notice received with Section I completed, and
  2. A statement explaining why the information on the Notice does not match the information on the return (the statement should explain why the return was filed under a different sponsor name/EIN/plan number/ etc.).

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What should I do if the CP 403/406 Notice was sent by mistake?

A copy of the Notice should be sent to the address shown below (in the last FAQ) along with a statement explaining why you think the notice was mistakenly sent.

 

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What if I receive a notice even though I filed a final Form 5500 return in a previous year?

Review  the copy of the previously filed Form 5500 to determine if:

  1. The final return box was checked,
  2. The return indicated zero assets at the end of the year, and
  3. The return indicated zero participants at year-end.


If the copy of the return indicates all of the above, then respond to the CP 403/406 Notice with Section II completed. If the copy of the return does NOT indicate all of the above, then our records will not indicate a final return was filed. You must continue to file a return until the plan has zero assets and zero participants, or the previously filed return must be amended. You should respond to the notice that you will or have filed the missing return and complete Section III of the CP403/406 Notice.

 

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What if I am exempt from filing a Form 5500 and filed incorrectly in the past?

If you're exempt from filing, submit the following:

  1. A copy of the CP 403/406 Notice received with Section II completed, and
  2. A detailed explanation in writing stating which exemption has been met or why the return is not required to be filed.

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Who is responsible for the Form 5500 series filing?

The plan sponsor and plan administrator are ultimately responsible for the filing of the annual Form 5500, 5500-EZ or 5500-SF.
 

In some cases, the plan sponsor and plan administrator may have a contract with an outside administrator who may actually complete the annual Form 5500-series filings. However, the plan sponsor and plan administrator are responsible for the accuracy of the filing and they must sign the return. In order to determine if completion of the Form 5500-series is covered under a contract with the outside administrator, the plan sponsor and plan administrator should review their contract with the outside administrator.
 

To find out what Forms 5500, 5500-EZ or 5500-SF were filed in the past, filing information may be researched at www.free.erisa.com.
 

Instructions for Form 5500
Instructions for Form 5500-EZ
Instructions for Form 5500-SF

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Can I get an extension of time to reply to the CP 403/406 Notice?

Extensions to reply to the CP 403/406 Notice are not allowed. The CP 403 has a 30-day response date. If a response is not received by the response date, a Final Notice (CP 406) is mailed 12 weeks after the CP 403. A response must be received within the 30-day timeframe to prevent further action on accounts.

 

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What are the penalties on late-filed or incomplete Form 5500 returns?

The IRS penalties for late filing are $25 per day up to a maximum of $15,000.

The DOL penalties can run up to $1,100 per day (no maximum).

 Types of Plans

IRS Penalty

DOL Penalty

Pension

 X

 X

Welfare Plan

 

 X

Welfare/Fringe Benefit Plan 

 

 X

All Form 5500-EZ Filers

 X

 


Note: An incomplete return is not considered filed until it is complete. Incomplete returns are subject to late-filing and/or incomplete penalties from the IRS and/or DOL.

 

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Is there any way to reduce Form 5500 late filer penalties?

Yes, both IRS and DOL have programs to deal with penalties on the Form 5500.
 

The DOL offers the Delinquent Filer Voluntary Compliance Program (DFVCP) to encourage voluntary compliance with the annual reporting requirements. The DFVCP gives delinquent plan administrators a way to avoid potentially higher civil penalty assessments by satisfying the program’s requirements and voluntarily paying a reduced penalty amount.
 

The IRS offers penalty abatement in conjunction with the DFVCP under Notice 2002-23. This notice provides administrative relief from the penalties for Form 5500 under IRC sections 6652(c)(1), (d), (e), and 6692 for failure to timely comply with the annual reporting requirements under IRC sections 6033(a), 6057, 6058, 6047, and 6059. This administrative relief applies to late filers who both are eligible for and satisfy the requirements of the DFVC program.
 

Note: The DFVC program does not apply to Form 5500-EZ filers.

Only the IRS can assess penalties on Form 5500-EZ. The DOL does not have any jurisdiction over Form 5500-EZ and cannot assess penalties against delinquent Form 5500-EZ filings and, therefore, cannot include them in their DFVC Program. The IRS will consider a “reasonable cause” statement submitted explaining why the return is late.

 

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Who should I contact with questions about a CP 403/406 Notice?

Call Customer Account Services at (877) 829-5500 (toll-free) for questions about the Notices and Form 5500, 5500-EZ or 5500-SF filing requirements.

 

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Where should I send replies to CP 403/406 Notices?

Send responses to the address listed in the upper left-hand corner of the Notices and the fax number listed in the body of the Notices. Only employees in Ogden can adjust accounts.


Write or fax the EP Entity Unit in Ogden using the following contact information:

Internal Revenue Service
Ogden, UT 84201-0018
Attention: EP Entity Unit, Mail Stop 6273
 

Fax Number: (801) 620-7116

Private Delivery Service:

Internal Revenue Service
1973 N. Rulon White Blvd.
Ogden, UT 84404
Attention: EP Entity Unit, Mail Stop 6273


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Page Last Reviewed or Updated: 13-Nov-2013