Penalty abatement
IRS Penalty Abatement
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.
- Failure-to-file
- 5%/mo, up to 25%
- Failure-to-pay
- 0.5%/mo, up to 25%
- Two paths
- First-Time Abatement or reasonable cause
- Filed on
- Form 843
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.
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.
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.
Client reviews
What clients say about Penalty abatement.
5.0 on Google across 356+ verified reviews. A few relevant to Penalty abatement below; read them all on our reviews page.
innovative tax has been the best experience i ever had with a tax relief company.charlie the tax expert knew how to get me the most $ back on my return .and coy answered any ?'s i had professional and promt..will do business again ,for sure .
My IRS tax issues are finally over!! If you need a trustworthy company to take care of back taxes, look these guys up!! Vic was awesome!!
Iam very satisfied with my experience with innovative tax relief group. Victor Acosta was my case manager. He has worked diligently to help resolve my tax debts. He kept me informed on everything that he was doing thanks to Victor I feel much better about my tax situation. I recommend him to anyone.
I cannot say enough good about Innovative Tax Relief. They have been very helpful and professional through this entire process. Josh has been a pleasure to work with. I would highly recommend them to anyone needing help to resolve tax issues.
I used ITR for the first time this year. I was pleasantly surprised with how promptly and professionally they resolved my tax issues and straightened out my debts for the year. I would not hesitate to use them again and I’m grateful I found them!!
I experienced with Innovative Tax Relief a very professional and courteous team working on a successful outcome with the IRS. Especially Vic Acosta, who tirelessly worked towards a favorable solution to my tax problems.
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?
Related services
Cases often touch more than one service.
Many cases start in one category and shift as we understand the numbers. Here are the services this one most often pairs with.
IRS tax relief
Tax Relief Services & Programs for IRS Tax Debt
Tax relief services are not one product. The IRS offers multiple tax debt relief programs, and which one fits your case depends on your income, assets, and filing history. A licensed Enrolled Agent walks every option with you and runs the one that costs you the least.
Learn moreTax resolution
Tax Resolution Services
Tax resolution is the work of fixing an open IRS problem and getting collection to stop. When the IRS is sending letters, calling, or threatening to garnish wages, a tax resolution firm steps in, files Power of Attorney, and takes over from there. You do not talk to the IRS again unless you want to.
Learn moreTax preparation
Tax Preparation Services
Tax preparation by IRS Enrolled Agents and CPAs. Federal, state, and local returns for individuals, sole proprietors, S-corps, partnerships, and C-corps. We handle the current year, prior-year amendments, and unfiled back-year returns. The same team that prepares your return represents you if the IRS has questions later.
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, remotely from our West Palm Beach headquarters. Florida is our home base, and we keep dedicated local pages for the metros we serve most.
Florida local pages
Ready to resolve your Penalty abatement case?
Free consultation with our team. No obligation.
Prequalification
See if You Qualify for Tax Relief
How much do you owe?