CP 173 - ES Penalty

Purpose: CP 173 is a settlement notice generated to inform the taxpayer of a computer generated Estimated Tax penalty assessment (TC 176) on Form 990-T, Exempt Organization Business Income Tax Return, Form 990-PF,, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation, Form 1041, U.S. Income Tax Return for Estates and Trusts, and the Form 1120, U.S. Corporation Income Tax Return, series. The notice is issued in the cycle the TC 150 posts with a full paid module (Status 10 or 12) and in the absence of any other taxpayer settlement notice.

To view an exhibit of the CP 173, refer to Taxpayer Correspondence Services (TCS) website Servicewide Notice Information Program SNIP.

Review Instructions:

Use the NRPS selection key as a guideline to assist in the review of the notice.

Follow General Review procedures. If the return is not included with the NRPS package, work the case without it.

Verify that the ES payments on the notice module match the ES credits claimed on the return. If the credits do not match, then some or all of the ES payments may have been misapplied. See the table below.

Misapplied ES Payments

Late or timely unclaimed or excess payments posting incorrectly to the module

Timely missing payments posting incorrectly to a different module or TIN

Research

Research the NRPS package and IDRS for any timely payments that must be applied or removed from the notice module. Follow the table below.

Research for Timely Payments

Request payment voucher according to local procedures

Check for an indication of the correct placement of questionable payments

Use CC BMFOL and TXMOD

Research additional EINs indicated on the return or in account history.

Case Resolution If found:

Transfer the payment(s) to and/or from the notice module

Use CC PIEST to decide if the ES Penalty will recompute