IRS first-time penalty abatement: who qualifies and how to ask

FTA applies to three penalties:

• Failure to file (5% a month, up to 25%)
• Failure to pay (0.5% a month, up to 25%)
• Failure to deposit (for employment taxes)

It doesn't cover accuracy-related penalties, fraud penalties, or the estimated tax penalty. It applies to a single tax period — usually the earliest year with a penalty. If you have penalties in several years, FTA can remove the first, and reasonable cause relief may cover the others.

You generally qualify if:

1. Clean history: you didn't have penalties (other than an estimated tax penalty) in the 3 tax years before the year you're asking about, or any penalty was removed for a reason other than FTA.
2. Filing compliance: you've filed all currently required returns or have a valid extension.
3. Payment compliance: you've paid, or arranged to pay, the tax due — an installment agreement in good standing counts.

You don't need to explain why the problem happened. That's what makes FTA different from reasonable cause.

On a $20,000 tax balance filed four months late and unpaid for a year, the combined failure-to-file and failure-to-pay penalties can run several thousand dollars, plus interest on those penalties. Removing them can reduce the balance meaningfully — and can sometimes bring it under the $50,000 limit for an online payment plan. Estimate your penalties with the IRS penalty calculator.

Note: the failure-to-pay penalty keeps accruing until the tax is paid. If you request FTA while a balance is still open, the IRS may remove only penalties assessed so far; you can ask again after the tax is paid for the remainder.

• By phone: call the number on your notice (verified on IRS.gov) and ask for "first-time abatement" for the specific tax year. Many requests are approved on the call.
• In writing: send a letter or Form 843 stating the tax period, the penalty and that you meet the FTA criteria.
• Through a professional: an enrolled agent, CPA or attorney with Form 2848 can request it for you.

If the IRS denies the request, you can appeal through the Collection Appeals Program or the Independent Office of Appeals.

If you had a genuine reason — serious illness, a disaster, a death in the family — consider asking for reasonable cause first and saving FTA for a future year when you don't have a reason. The IRS will apply FTA automatically in some systems if you qualify, so if you prefer reasonable cause, say so clearly. If you don't have a qualifying reason, FTA is the simplest route. See penalty abatement for all the options.

Many FTA requests are granted in a single phone call. Call the number on your penalty notice (verified on IRS.gov) and say you're requesting First Time Abate for a specific penalty and tax year. Have your notice, Social Security number and the tax year ready. The representative will check your compliance history: no significant penalties in the prior three years, all required returns filed, and the tax paid or a payment plan in place. If you qualify, the IRS removes the penalty and the interest charged on it, and you'll receive a notice confirming the adjustment. If the penalty exceeds the amount the representative can approve by phone, you may need to send a written request. If you're denied, ask why and whether reasonable cause or a written request is an option. Write down the date, the representative's ID number and the outcome — it helps if anything goes wrong later.

• Asking before filing all returns — the request will be denied.
• Asking for the wrong year. FTA usually applies to the earliest penalty year.
• Forgetting that interest on the penalty is removed too — check that the adjusted balance reflects it.
• Paying a company a large fee for something you can often request yourself in one phone call. See how to choose a tax relief company.