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Understanding Your CP 403 or CP 406 Notice

The CP 403 and CP 406 notices are delinquency notices for Form 5500-series returns. You received this notice because you did not file a Form 5500-series return for a particular plan year and our records indicate the plan is still active. 


What you need to do

  • You must respond to a CP 403 or CP 406 notice within 30 days to prevent further account action.
  • Review your records to determine if a Form 5500/5500-EZ/5500-SF was filed.
  • 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.
  • 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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Answers to Common Questions

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.

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

  • CP 403 is mailed to 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. 
  • CP 406, the Final Notice, is mailed 12 weeks after the CP 403 if the IRS does not receive a response to the CP 403 by the response date. CP 406 also has a 30-day response date. Responses must be received within 30 days to prevent further account action.

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.).

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

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


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 or 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 CP 403 or 406 notice.


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.

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


Can I get an extension of time to reply to the CP 403 or CP 406 notice?

Extensions to reply to the CP 403 or 406 notices 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.


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.


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

Yes, the IRS and Department of Labor both have programs to address late filing penalties on the Form 5500.

The Department of Labor has a Delinquent Filer Voluntary Compliance Program (DFVC) to allow plan administrators who fail to file a timely annual report to pay reduced civil penalties. This VC program does not apply to Form 5500-EZ filers, however.

The IRS provides administrative relief for Form 5500 late filers who are eligible for relief under DOL's DFVC program. Filers must also submit a paper Form 8955-SSA along with the delinquent filing. See Changes to IRS Penalty Relief for DOL DFVC Filers and Notice 2014-35. Relief is available for penalties under Sections 6652(c)(1), 6652(d), 6652(e) and 6692 of the Internal Revenue Code for failure to timely comply with the annual reporting requirements under IRC Sections 6033(a), 6057, 6058, 6047 and 6059 with respect to Form 5500. 

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. See Penalty Relief Program for Form 5500-EZ Filers for details on the IRS pilot penalty relief program. 


Who should I contact with questions about a CP 403 or CP 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.


Where should I send replies to CP 403 or CP 406 notices?

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

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

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

 

Fax: (801) 620-7116

 

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

 

Page Last Reviewed or Updated: 18-Aug-2014