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Need Relief? Request IRS Penalty Abatement

In certain cases, the IRS may offer penalty relief for failing to file a tax return, neglecting to pay your taxes on time, or not depositing taxes when due.

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IRS Penalty Relief Options

The IRS charges penalties for a variety of reasons. The most common are for failing to file or pay taxes on time. If you owe taxes, penalties and interest can quickly add up, making it difficult to get out of tax debt. Thankfully, the IRS does provide three types of penalty relief.

IRS Penalties Eligible For Relief

There are several IRS penalties eligible for relief, including:

  • Failure-to-File (FTF) Penalty. The IRS may offer first-time penalty abatement if you have a good record with the IRS and have previously met your tax obligations. The penalty may also be waived or reduced for reasonable cause or statutory exception, if applicable.

  • Failure-to-Pay (FTP) Penalty. If you did not pay your taxes on time, you may be able to have the penalty waived or reduced for reasonable cause, first-time penalty abatement, or statutory exception.

  • Accuracy-Related Penalties. An accuracy-related penalty typically applies when you underreport income or claim deductions or credits you aren’t eligible to receive. Penalty fees may be waived or reduced if you acted in good faith or show reasonable cause why you made the error.

  • Failure-to-Deposit Penalty. Employers who do not file their employment taxes on time or in the correct amount may qualify for relief if they can prove reasonable cause. In certain cases, they may also be eligible for first-time penalty abatement.

  • Underpayment of Estimated Tax. If an individual or business does not pay enough estimated tax on their income or pays it late, they may qualify for penalty relief in limited circumstances.

  • Dishonored Check. If your check bounces or your electronic payment is rejected, the penalty may be removed if there is reasonable cause.

If you’ve always been in good standing with the IRS and this is your first time receiving an FTF or FTP penalty, first-time penalty abatement is generally the best course of action.

How to Request IRS Penalty Abatement

You must submit your penalty abatement request within three years of the date you filed your return or two years after you paid the penalty, whichever is earlier.

For first-time penalty abatement (FTA) requests, call the IRS. If you have an FTP penalty and are seeking FTA, it may be beneficial to wait until your taxes are paid in full. Upon final payment of your taxes and penalties, you can then file Form  843, Claim for Refund and Request for Abatement.

Keep in mind that FTA only applies to one tax year. If you have penalties from two or more tax years, you’ll need to request relief under other options (reasonable cause or statutory exception) for the subsequent years.

To request relief due to reasonable cause, use Form 843. Requests made by phone are rarely approved. Make sure you provide sufficient evidence to support your claims, such as medical or court records, proof of a natural disaster, and a letter detailing the facts and circumstances that made it impossible for you to file or pay on time.

For relief under a statutory exception, it’s best to file Form 843. If you are claiming you received incorrect written advice from the IRS, you’ll need to provide a copy of the advice received and an explanation of how you relied on the advice. Evidence may also include an examination report or any letters you received from the IRS. 

Be sure to follow up with the IRS to ensure they receive your abatement request. If they don’t have a record of it, you will need to file again.

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Common Questions About Penalty Abatement