FIRST-TIME PENALTY ABATEMENT

A Simple Way to Eliminate IRS Penalties 

Missing a tax filing deadline or being unable to pay your tax bill is stressful enough. Adding IRS penalties on top of what you already owe can make the situation feel overwhelming. 

Many taxpayers wish they could just wipe those penalties away—because without them, paying off the tax debt or setting up an affordable payment plan might suddenly become possible. 

Convincing the IRS to remove penalties is not easy. The standard method is to request Reasonable Cause relief, which requires proving that extraordinary circumstances—such as a serious illness, a natural disaster, or the death of a close family member—directly prevented you from filing or paying on time. The documentation burden is high, and many requests are denied. 

However, there’s a much simpler route: First-Time Penalty Abatement (FTA). This program is the opposite of Reasonable Cause relief—no special reason is required. If you meet the eligibility requirements, the IRS will grant it without asking why you were late. 

What Does “Abatement” Mean? 

“Abatement” simply means the IRS removes a penalty from your account. 

Which Penalties Can Be Removed with First-Time Abatement? 

FTA generally applies to two of the most common penalties: 

1. Failure to File – A charge of 5% of the unpaid tax per month the return is late, up to a maximum of 25% after five months. For example, owing $100,000 and filing five months late could result in a $25,000 penalty
   
2. Failure to Pay – A charge of 0.5% per month on the unpaid balance, maxing out at 25% over roughly four years.

 If both penalties apply, the combined maximum can reach 48.5% of the original tax owed—turning a $100,000 debt into $148,500. How to Qualify for First-Time Penalty Abatement 

Unlike Reasonable Cause, First-Time Abatement is based on your compliance history, not your circumstances. To be eligible, you must: 

1. Be current with all filing and payment obligations – Any required returns must be filed, and you must be paying or have an arrangement to pay any tax due.
2. Have a clean penalty record for the prior three years – No significant penalties for late filing or late payment in the three years before the year you’re requesting relief for.
3. Pay or arrange to pay the underlying tax – The IRS will not remove penalties if you have no plan to resolve the tax debt itself.

In short, the IRS uses FTA to reward taxpayers who have otherwise demonstrated good compliance. 

Unsure If You Qualify? A good first step is to review your account history. Tax professionals can call the IRS’ Practitioner Priority Line, a special service that provides account and penalty information without routing the matter through the collections department. This low-profile approach can help determine eligibility without triggering unnecessary enforcement activity. 

The Bottom Line 

Life happens—deadlines get missed and tax bills sometimes go unpaid. The penalties the IRS adds can be crushing, but relief is possible. While Reasonable Cause abatement is difficult to secure, First-Time Penalty Abatement is far more straightforward and doesn’t require you to prove hardship—only that you’ve maintained a clean record for three years and are now in compliance. With FTA, you can shed a large portion of your IRS penalties and take a significant step toward resolving your tax debt.