IRS penalties can dramatically increase the total amount you owe. The good news is that the IRS has formal programs for removing penalties in certain situations — and many taxpayers who qualify never ask for relief. This guide explains how IRS penalty abatement works, who qualifies for First Time Abatement, and how to request it.
This content is for educational purposes only and is not tax or legal advice. Consult a licensed tax professional for guidance specific to your situation.
Common Types of IRS Penalties
Before pursuing abatement, it helps to understand which penalties you are dealing with. The IRS assesses many types of penalties, but the most common for individual taxpayers are:
Failure-to-File Penalty
This penalty applies when a tax return is not filed by the due date (including any valid extension). The penalty is calculated as a percentage of the unpaid taxes for each month the return is late, up to a maximum cap. If your return was significantly late, this penalty alone can represent a large portion of your total balance.
Failure-to-Pay Penalty
This penalty applies when taxes owed are not paid by the original due date, even if you filed the return on time. It is generally smaller than the failure-to-file penalty but continues to accrue until the balance is paid in full.
Accuracy-Related Penalty
The IRS assesses accuracy-related penalties when it determines that a tax return contained a substantial understatement of income or tax, negligence, or disregard of rules. This penalty is typically a percentage of the underpayment attributable to the inaccuracy.
Estimated Tax Penalty
Self-employed individuals and others who are required to make quarterly estimated tax payments may face this penalty if those payments were not made on time or were insufficient.
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What Is First Time Abatement?
First Time Abatement (FTA) is an administrative waiver that allows the IRS to remove certain penalties for taxpayers who have a clean compliance history. It is one of the most straightforward penalty relief programs available and does not require proof of a specific hardship or extraordinary circumstance.
The IRS created the FTA program to reward taxpayers with a history of compliance who experienced an isolated lapse. The idea is that a taxpayer who has consistently filed and paid on time deserves some leniency for a one-time failure.
Who Qualifies for First Time Abatement
To qualify for FTA, you generally need to meet all of the following criteria:
- No prior penalties: You must not have been assessed any significant penalties for the three tax years immediately preceding the year for which you are requesting relief. Minor penalties that were paid in full may not count against you, but a pattern of penalties will disqualify the request.
- Filing compliance: You must have filed all required returns for prior years, or have obtained a valid extension. Unfiled returns for prior years are a disqualifier.
- Payment compliance: You must have paid, or arranged to pay, any tax owed (other than the penalty being abated). This includes being current on an installment agreement if one is in place.
FTA is available for failure-to-file, failure-to-pay, and failure-to-deposit penalties. It is not available for accuracy-related penalties or some other penalty types.
How Much Can Be Removed?
The amount removed through FTA depends on the penalty type, the tax year, and the amount of unpaid tax that generated the penalty. In some cases — particularly for taxpayers with a significant failure-to-file penalty on a large balance — the abated amount can be substantial. There is no fixed dollar limit on FTA; it simply removes the qualifying penalty for the year in question.
It is important to note that FTA applies to one tax year at a time for most purposes. If you have penalties across multiple years, you may be able to get FTA for the earliest year in which you qualify, but subsequent years may need to be addressed through other relief programs.
How to Request First Time Abatement
By Phone
The fastest way to request FTA for smaller penalty amounts is to call the IRS directly. The number on your most recent IRS notice connects you to the appropriate unit. When you reach an IRS representative, explain that you are requesting First Time Abatement for the failure-to-file or failure-to-pay penalty for the specific tax year. The representative can often make a determination on the call and issue the abatement immediately if you qualify.
By Letter
For larger penalty amounts, or if you prefer a written record, you can submit a written request to the IRS. The letter should identify the tax year and penalty type, state that you are requesting abatement under the First Time Abatement administrative waiver, explain that you meet the compliance history requirements, and include your contact information and taxpayer identification number.
Written requests take longer to process than phone requests but create a formal paper trail.
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Reasonable Cause Abatement
If you do not qualify for FTA — for example, because you have prior penalties in your history — you may still be eligible for penalty abatement based on reasonable cause. The IRS considers reasonable cause abatement when a taxpayer can demonstrate that the failure to file or pay was due to circumstances beyond their control.
Examples of circumstances that may support a reasonable cause argument include:
- Serious illness or death of the taxpayer or an immediate family member
- Natural disaster that destroyed records or prevented timely filing
- Reliance on incorrect advice from a tax professional
- Unavoidable absence or incapacity
Reasonable cause requests require documentation and are evaluated on a facts-and-circumstances basis. The IRS does not automatically grant them, and the burden is on the taxpayer to demonstrate that the failure was not willful or the result of neglect.
When to Use a Tax Professional
For straightforward FTA requests involving a single year with clear compliance history, many taxpayers handle the request successfully on their own by calling the IRS. However, professional assistance is worth considering in these situations:
- You have penalties across multiple years and need a strategy for addressing all of them
- You are pursuing reasonable cause abatement, which involves making a documented argument to the IRS
- The penalty amounts are significant and you want to ensure the request is made correctly
- You are simultaneously trying to negotiate a payment plan or other resolution and want the penalty abatement coordinated with the broader strategy
- Previous abatement requests have been denied and you want to appeal the denial
Enrolled agents and tax attorneys who specialize in IRS resolution are experienced in making penalty abatement arguments and know what documentation and framing tends to be most effective.
What to Do If Your Request Is Denied
If the IRS denies your abatement request, you have the right to appeal the decision. The denial letter will explain the reason and outline the appeals process. In many cases, a well-documented appeal with additional supporting information can result in a successful abatement even after an initial denial.
The Bottom Line
IRS penalty abatement — particularly First Time Abatement — is an underused relief option that many qualifying taxpayers never pursue. If you have a clean prior compliance record and received penalties for a single year, it is worth requesting abatement before paying the full penalty amount. The process can be as simple as a phone call to the IRS.
For more complex situations involving multiple years, large penalties, or the need for a reasonable cause argument, a licensed tax professional can help you build the strongest possible case.
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This content is for educational purposes only and is not tax or legal advice. Consult a licensed tax professional for guidance specific to your situation.