If you've just been hit with a penalty after years of doing everything right, the IRS has a standing administrative waiver with your name on it. First Time Abate isn't a negotiation or a hardship program. If you meet the criteria, the IRS grants it as a matter of policy, and front-line phone agents can approve it on the spot.
Which penalties it covers
- Failure to file: the 5%-a-month penalty on 1040s and 1120s, and the per-owner penalties on partnership and S corporation returns
- Failure to pay: the 0.5%-a-month penalty
- Failure to deposit: payroll tax deposit penalties
It does not cover the accuracy-related penalty, the estimated-tax penalty, or fraud penalties. And interest is only removed to the extent it accrued on the abated penalty. Interest on the underlying tax always stands.
The eligibility test
- Clean three-year history. No penalties (beyond trivial amounts) for the three tax years before the year the penalty hit. FTA itself being granted in that window counts against you.
- All required returns filed (or valid extensions in place). You can't abate a penalty on a year while other returns are still missing.
- Current on payment. The tax is paid, or you're current on an installment agreement.
Strategy note: FTA only works once every three years,
so spend it wisely. If a bigger penalty may be coming (say, a still-unfiled return racking up
months), it can be worth reserving FTA for the larger bill and arguing reasonable cause on
the smaller one.
How to ask
- Phone first. Call the number on your IRS notice, say you're requesting "first-time penalty abatement," and confirm the three eligibility points. Agents can often approve it during the call; ask for the abatement in writing.
- Or write. Respond to the notice address with a short letter (template below) or file Form 843, Claim for Refund and Request for Abatement. Form 843 is the route if you've already paid the penalty and want it refunded.
- If FTA doesn't fit, argue reasonable cause: serious illness, natural disaster, destroyed records, or reliance on written professional advice, backed up with dates and documentation.
Request-letter template
[Your name / business name]
[Address]
[Taxpayer ID: SSN or EIN]
[Date]
Internal Revenue Service
[Address from your notice]
Re: Request for First Time Abate, [Notice number], [Form, e.g. 1065], [Tax year]
To whom it may concern:
I am requesting abatement of the [failure-to-file / failure-to-pay] penalty of
$[amount] assessed for the [year] tax year under the IRS First Time Abate
administrative waiver.
I meet the criteria: (1) no penalties were assessed for the prior three tax
years; (2) all required returns have been filed; and (3) the tax has been paid
[or: I am current on an approved installment agreement].
Please abate the penalty and any interest that accrued on it, and confirm in
writing. Thank you.
Sincerely,
[Signature / name / title]
Know the number you're fighting
Before you call, know exactly what the penalty should be. Agents sometimes quote totals that bundle tax, penalties, and interest together.