If your request for reasonable cause relief is denied, you will receive Letter 854C, Penalty Waiver or Abatement Disallowed/Appeals Procedure Explained. Additionally, if applicable, you will receive a CP 283 Notice, Penalty Charged on Your Form 5500 Return. Once the request is denied, the penalty with respect to that delinquent return will be assessed, and you will not be eligible to make a request for relief under the IRS penalty relief program for the same delinquent return.
Sources:
IRM Part 20. Penalty and Interest. Chapter 1. Penalty Handbook. Section 1. Introduction and Penalty Relief
IRM Part 8. Appeals. Chapter 11. Penalties Worked in Appeals. Section 1. Return Related Penalties in Appeals
Publication 1586
