IRS Penalty Abatement: How to Get a Penalty Removed
The IRS takes away penalties for late filing, late payment and late deposit in two common situations. The first case is a clean record covering the last three years and it is known as First Time Abate. The other is a good reason you could not file or pay on time. Three ways to ask are available: Form 843, a phone call or a written request.
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What is IRS first time penalty abatement?
First Time Abate is the most common penalty relief, based on the IRS administrative waiver page. You do not have to name it or send any papers. After you ask, the IRS checks your record.
- During the prior three years, you filed every return of the same type on time.
- Apart from an estimated tax penalty or one that was charged and then removed, no penalty was charged in those years.
- For those years, businesses need no more than three deposit penalties taken off.
What is the new automatic penalty relief?
Starting with returns for the 2025 tax year, the Automatic Exemption from Penalty takes the place of First Time Abate. A clean record over your last three years means the IRS charges no penalty now, even if you file or pay late.
You do not have to ask. You get a letter that confirms the relief was applied. Reach out to the IRS if a bill shows up with a penalty you believe should have been covered. For earlier years, First Time Abate still applies.
What counts as reasonable cause?
When your record is not clean, a good reason can back a request for relief. The IRS decides each case on its own facts, as its reasonable cause page explains.
- A fire, a natural disaster or a civil disturbance.
- You cannot reach your records.
- A death, serious illness or unavoidable absence affecting you or a close relative.
- System problems that delayed an on-time payment or an electronic filing.
What does not count as a reason?
Not having enough money by itself does not qualify. Not knowing the rules, a simple mistake and relying on a tax preparer also do not qualify. Other facts may still help when they show that you tried to comply.
How can you ask the IRS to remove a penalty?
Use the number on your notice to call, with the penalty, your reason and the notice ready in front of you. Some requests can be approved by the IRS while you are still on the call, per its penalty relief page.
If the IRS cannot approve your request by phone, send your request in writing on Form 843, Claim for Refund and Request for Abatement. If the IRS turns down your request in a letter, you can check whether an appeal is possible.
Questions about Penalty relief
Does penalty abatement also remove interest?
When a penalty is taken off, the interest charged on it goes away as well. Interest on the tax itself stays. To see how that adds up, check the IRS payment plan interest rates page.
Can a penalty still be removed while I am on a payment plan?
Yes, it can. For what you cannot pay, the IRS itself suggests a plan and a plan like that can lower penalties that come later. Once a penalty comes off, the amount your plan has to cover gets smaller too.
Which penalties can First Time Abate remove?
Failure to pay, failure to deposit or failure to file, at any amount. No coverage for the estimated tax penalty.
Would you like to know which penalties can be removed?
A licensed tax pro can read your notices and check the last three years. That pro can then ask for relief that fits and you can set up a plan. Alternatively, you can put your number in the form.
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