Understanding Your CP254 Notice


What this notice is about

Your organization submitted a paper return for the tax period in question. Because our records show that you must file electronically, the paper return does not satisfy your filing obligation.

What you need to do

Determine if your organization has total assets of $10 million or more and files 250 returns in a calendar year.

  • If yes, file the electronic return as soon as possible. If you fail to do so, you may be subject to a failure to file penalty.
  • If no, respond to the CP254 notice explaining why you are not required to file electronically. You can respond by:
    • Mail using the enclosed envelope with the notice, or
    • Fax to the fax number in the notice using either a fax machine or an online fax service. Protect yourself when sending digital data by understanding the fax service’s privacy and security policies.

Frequently asked questions

You must count all information and tax returns, including, but not limited to:

  • Form W-2
  • Form 1099
  • Form 720
  • Form 941
  • Form 944
  • Form 990
  • Form 990-EZ
  • Form 990-N
  • Form 990-PF
  • Form 990-T

Review the rejection notice to determine the reason the system couldn’t accept the return. Correct the return and resubmit it electronically.

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