Penalty abatement
IRS Penalty Abatement
Updated
On an older tax balance, penalties are often a large share of what you owe. Penalty abatement is the process of getting IRS penalties removed, either through First-Time Abatement when your compliance history is clean, or through reasonable cause when something outside your control caused the problem. When a penalty is removed, the interest charged on that penalty comes off with it.
Overview
Penalty Abatement: The Essentials
IRS penalties stack month after month, and interest compounds on top of them, so a balance that has sat for a few years is often more penalty than tax. That is the part most people do not realize can be undone: the underlying tax generally stands, but the penalties, and the interest riding on them, can come off when you have grounds for it.
Penalty abatement is that process. There are two paths, and most people do not know they qualify for the first one. We check both, document the case, and file the request, whether that is a single failure-to-file penalty or several years of stacked penalties across multiple returns.
How this case usually unfolds
Penalties Stacked on the Balance · Penalty Abatement
On older balances, penalties and the interest on them are often a big share of what is owed. The pattern: pull transcripts to total the penalties, check First-Time Abatement first (many clients qualify without knowing), and if that does not fit, document a reasonable-cause case and file Form 843.
Sound similar to yours?
No two cases are identical, but patterns repeat. Talk to one of our Enrolled Agents to find out which programs apply to your situation.
Get Free ConsultationThe Two Ways to Remove IRS Penalties
Almost every penalty abatement case runs on one of these two paths. We determine which one fits before filing anything.
First-Time Penalty Abatement (FTA)
A one-time administrative waiver available if you have a clean compliance history: no penalties for the prior three years, all required returns filed, and any current balance paid or on a payment plan. Many taxpayers qualify and never ask. FTA is often the fastest penalty relief there is.
Reasonable Cause
When something outside your control kept you from filing or paying (serious illness, a death in the family, a natural disaster, destroyed records, or reliance on bad professional advice) the IRS can remove the penalties for reasonable cause. The outcome turns on documentation, and that is what we build.
Which IRS Penalties Can Be Abated
Failure-To-File Penalty
The larger of the two at 5 percent of the unpaid tax per month, up to 25 percent. This is usually the biggest single item we target.
Failure-To-Pay Penalty
0.5 percent of the unpaid balance per month, up to 25 percent. It runs longer because it continues until the balance is paid in full.
Failure-To-Deposit Penalty
For businesses that fell behind on payroll tax deposits. Often eligible for abatement with reasonable cause.
Estimated Tax and Accuracy Penalties
Estimated-tax and accuracy-related penalties can sometimes be reduced or removed, usually through reasonable cause or on appeal.
What Changes With Automatic Exemption From Penalty (AEP)
The IRS is replacing First Time Abate with a new relief called Automatic Exemption from Penalty, beginning summer 2026. The IRS states that under AEP, if you file or pay late in the current year but have timely filed returns and paid the tax due for the three prior years, or twelve consecutive quarters for quarterly filers, the penalty is not assessed in the first place.
The practical difference is who has to ask. First Time Abate required a request, whether by phone, in writing, or on Form 843. AEP is applied without one. That does not make representation pointless, because the three-year compliance test still has to be met, penalties outside the covered set still require reasonable cause, and an incorrect assessment still has to be challenged. It does mean anyone still selling a routine first-time abatement request as though it were hard work is overselling it.
If you were assessed a penalty for an earlier year, First Time Abate rules still govern that year. Check the current IRS guidance linked at the end of this page before assuming either way.
How We Request Penalty Abatement
1. Pull Transcripts and Total the Penalties
We get your IRS account transcripts to see exactly which penalties were assessed, for which years, and how much of your balance is penalty versus tax.
2. Check First-Time Abatement First
FTA is the fastest path, so we check your three-year compliance history before anything else. If you qualify, we request it by phone or in writing.
3. Build the Reasonable-Cause Case
If FTA does not apply, we document the circumstances that caused the failure and file Form 843 (Claim for Refund and Request for Abatement) with the supporting evidence.
4. Appeal a Denial
A denied abatement request can be appealed to the IRS Office of Appeals. Many denials are reversed with a stronger, better-documented reasonable-cause package.
Discreet help
You Don't Have to Explain How It Happened
Owing the IRS can feel like something to hide. Plenty of the people who call us haven't told anyone, and some stopped opening the mail a while ago. That's far more common than it feels, and it's nothing we judge.
Your consultation is free and confidential. Once you hire us and Power of Attorney is on file, the IRS deals with us, so the calls and the back-and-forth stop landing on you.
How We Keep It Discreet
- A free, confidential first conversation
- No judgment about how it happened
- Once Power of Attorney is filed, the IRS contacts us
- Phone, secure document portal, and video, with no office visit
Federal programs
Nine IRS Programs. We Look Through Them All.
Most tax debt is resolved through one of these nine programs. Which one fits depends on your numbers, your filing history, and assessment dates.
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Frequently asked
What People Ask About Penalty Abatement
What Is IRS Penalty Abatement?
What Is First-Time Penalty Abatement (FTA)?
What Counts as Reasonable Cause for Removing Penalties?
Does Penalty Abatement Remove Interest Too?
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Learn moreNationwide · all 50 states
Penalty Abatement in All 50 States
IRS representation is federal, so we handle Penalty abatement for clients in all 50 states, by phone, secure portal, and video. We keep dedicated local pages for the metros we serve most.
Florida local pages
Straight From the IRS
Everything on this page traces back to these IRS sources. They are what we work from every day.
These links open in a new tab.
- IRS: Administrative penalty relief (FTA and AEP)First Time Abate, and the Automatic Exemption from Penalty replacing it.
- IRS: Penalty relief for reasonable causeWhat the IRS accepts as reasonable cause, and what it does not.
- Form 843: Claim for Refund and Request for AbatementThe form used to request abatement in writing.
- IRS: Penalty reliefEvery route to removing a penalty, in one place.
Links verified2026-08-26. irs.gov · taxpayeradvocate.irs.gov
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