IRS Penalty Relief: First-Time Abatement and Reasonable Cause

IRS Penalty Relief Options

The IRS charges penalties for filing late, paying late, or not making required estimated payments. Fortunately, some taxpayers may qualify for penalty relief through either First-Time Abatement (FTA) or Reasonable Cause exceptions.

These programs can eliminate or reduce penalties, saving you significant money if you qualify.

What Is First-Time Abatement (FTA)?

First-Time Abatement is a one-time administrative waiver that allows eligible taxpayers to remove penalties for failure-to-file, failure-to-pay, or failure-to-deposit. It does not apply to accuracy-related or fraud penalties.

• Available once every three tax years.
• You must have filed (or filed an extension for) all required returns.
• You must have paid, or arranged to pay, any taxes due.
• No penalties for the prior three years.

See our guide on tax penalties and interest for more details on common charges waived under FTA.

Reasonable Cause Penalty Relief

If you don’t qualify for First-Time Abatement, you may still request penalty relief if you can show “reasonable cause.” The IRS considers whether you exercised ordinary business care but were unable to comply.

Common reasons accepted by the IRS include:

• Serious illness, death, or unavoidable absence.
• Natural disasters or fire.
• Inability to obtain necessary records.
• Reliance on incorrect advice from a tax professional or the IRS.

You’ll need to provide documentation to support your claim, such as hospital records, insurance reports, or correspondence with tax professionals.

How to Request Penalty Relief

You can request penalty relief by:

• Calling the IRS – Many FTA requests can be granted over the phone at 1-800-829-1040.
• Writing a Letter – Submit a written explanation to the address on your IRS notice.
• Form 843 – File Form 843, Claim for Refund and Request for Abatement.

Tip: If you’re also on a payment plan, you can still request penalty relief separately.

Frequently Asked Questions

Which penalties qualify for First-Time Abatement?

FTA applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties. It does not apply to interest, accuracy, or fraud penalties.

How do I know if I qualify for FTA?

You must be current on all filings, have no penalties in the last three years, and have paid or arranged to pay your taxes due.

Does penalty relief eliminate interest?

No. Interest on unpaid taxes generally cannot be waived, even if penalties are removed.

Bottom Line

If you’re facing IRS penalties, don’t panic. Many taxpayers qualify for First-Time Abatement or can prove Reasonable Cause. These programs can remove costly penalties and help you get back on track. For official guidance, visit the IRS penalty relief page or check our Support Center for more resources.