First-Time Penalty Abatement: How to Get IRS Penalties Waived

You filed late, paid late, or both — and now the IRS has tacked on hundreds or thousands of dollars in penalties. The original tax bill was painful enough; the penalties feel like salt in the wound. But there is a relief provision that many taxpayers do not know about: First-Time Penalty Abatement, or FTA. If you have a clean compliance history, the IRS will waive certain penalties entirely — no special circumstances required, no sob story needed.

Data Notice: The tax information in “First-Time Penalty Abatement: Get IRS Penalties Waived” reflects projected 2026 IRS data and current law. Annual inflation adjustments, legislative changes, and regulatory guidance may alter specific provisions. Confirm current rules at IRS.gov before making tax decisions. [first-time-penalty-abatement]

FTA is an administrative waiver, not a legal right — meaning the IRS grants it as a matter of policy, not because a statute requires them to. But the criteria are straightforward, and if you meet them, the IRS almost always approves the request. This guide explains which penalties qualify, how to determine your eligibility, and exactly how to request abatement.

What Is First-Time Penalty Abatement?

First-Time Penalty Abatement is an IRS administrative waiver that removes certain penalties for taxpayers who have a clean compliance history for the three tax years preceding the year in question. It has been available since 2001 under IRS Internal Revenue Manual (IRM) Section 20.1.1.3.6.1.

FTA is not:

A formal legal provision in the tax code
Available for all types of penalties
Something you need a professional to request (though one can help)
Limited to a specific dollar amount

FTA is:

An administrative policy the IRS follows consistently
Available once per “clean” cycle (once you use it, you need three more clean years to qualify again)
Applied to one tax year at a time (though you may qualify for multiple years if you meet the criteria for each)
One of the most underutilized penalty relief options available

Which Penalties Qualify for FTA?

FTA applies to three specific penalty types:

1. Failure to File Penalty (IRC Section 6651(a)(1))

Assessed when you file your tax return after the deadline (including extensions). The penalty is 5% of the unpaid tax per month, up to a maximum of 25%.

2. Failure to Pay Penalty (IRC Section 6651(a)(2))

Assessed when you do not pay the full amount by the original due date. The penalty is 0.5% of the unpaid tax per month, up to a maximum of 25%. For more on how these two penalties interact, see failure to file vs. failure to pay.

3. Failure to Deposit Penalty (IRC Section 6656)

Assessed against businesses that fail to make timely payroll tax deposits. The penalty ranges from 2% to 15% depending on how late the deposit is.

Penalties That Do NOT Qualify for FTA

Accuracy-related penalties (negligence, substantial understatement)
Fraud penalties
Estimated tax penalties (Form 2210)
Information return penalties (late W-2s, 1099s)
International information return penalties (Form 5471, FBAR, etc.)
Return preparer penalties

FTA Eligibility: The Three Requirements

To qualify for First-Time Penalty Abatement, you must meet all three of the following:

1. Three Years of Clean Compliance

For the three tax years preceding the penalty year, you must not have had any penalties assessed (or, if penalties were assessed, they must have been fully abated for reasonable cause).

Example: If you are requesting FTA for a 2025 penalty, the IRS reviews your compliance for tax years 2022, 2023, and 2024. If you had a failure-to-file penalty in 2023 (even a small one), you do not qualify.

What counts as “clean”:

No penalties at all for those three years
Penalties that were assessed but later abated (for reasonable cause, not FTA) — these do not disqualify you
Years where no return was required (because your income was below the filing threshold)

2. All Required Returns Are Filed (or an Extension Was Filed)

You must have filed all required returns, or at least filed a valid extension for any that are currently outstanding. If you have unfiled returns for any year — not just the penalty year — FTA will be denied.

This means if you owe taxes for 2025 and want the penalty waived, but you never filed your 2021 return, you must file the 2021 return first.

3. You Have Paid (or Arranged to Pay) the Tax

The underlying tax must be paid in full, or you must have an active installment agreement or other payment arrangement in place. The IRS will not abate penalties while the tax itself remains unaddressed.

Note: FTA abates the penalty, not the tax and not the interest. Interest on the penalty is also abated, but interest on the underlying tax continues.

How to Request FTA

Method 1: Phone Request (Fastest)

For most taxpayers, calling the IRS is the quickest way to get FTA.

Steps:

Call the IRS at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses)
Have your most recent tax return, the notice showing the penalty, and your SSN/EIN ready
Tell the agent you would like to request first-time penalty abatement for the specific tax year
The agent will review your account to verify you meet the three criteria
If you qualify, the agent can approve the abatement on the spot and process a refund (if you already paid the penalty) or reduce your balance

Tips for the call:

Call early in the morning (when the IRS opens) or late in the week (Wednesday through Friday tend to have shorter wait times)
Be specific: use the phrase “first-time penalty abatement” or “first-time abate” — IRS agents know this term
If the first agent is unfamiliar with FTA, politely ask for a supervisor or call back

Method 2: Written Request (Form 843 or Letter)

If you prefer to submit a written request or if the penalty is complex:

Using Form 843 (Claim for Refund and Request for Abatement):

Complete Form 843, identifying the tax year, penalty type, and penalty amount
In the explanation section, state: “Requesting first-time penalty abatement under IRM 20.1.1.3.6.1. I have a clean compliance history for the three prior tax years, all returns are filed, and the underlying tax is paid/being paid.”
Mail the form to the IRS service center that handles your account (the address is on your penalty notice)

Using a letter: Write a clear, concise letter to the IRS service center that includes:

Your name, SSN/EIN, and contact information
The tax year and penalty type you are requesting abatement for
A statement that you meet the FTA criteria
A request to apply FTA and abate the penalty

Method 3: Response to a Penalty Notice

If you received a CP14, CP501, or other penalty notice, you can write “First-Time Abate” on the response form, check the appropriate box, and mail it back. Some notices include a specific section for penalty relief requests.

How Much Can FTA Save You?

The savings depend on the penalty type and the amount of unpaid tax:

Failure to File Example

Unpaid tax: $10,000
Filed 4 months late
Penalty: 5% x 4 months = 20% = $2,000
FTA saves: $2,000 plus interest on the penalty

Failure to Pay Example

Unpaid tax: $10,000
Paid 12 months late
Penalty: 0.5% x 12 months = 6% = $600
FTA saves: $600 plus interest on the penalty

Combined Example

If you filed 3 months late and paid 6 months late on $15,000:

Failure to file penalty: ~$2,250 (5% x 3 months, offset by FTP overlap)
Failure to pay penalty: ~$450 (0.5% x 6 months)
Total FTA savings: ~$2,700 plus interest

For large tax balances, FTA can save thousands of dollars with a single phone call.

What If You Do Not Qualify for FTA?

If you have penalties in your prior three-year history and do not qualify for FTA, you can still request penalty abatement based on reasonable cause.

Reasonable Cause Criteria

The IRS will waive penalties if you can show that your failure to file/pay was due to reasonable cause and not willful neglect. Valid reasonable cause arguments include:

Serious illness or hospitalization — You or an immediate family member
Death of a family member — Particularly a spouse or dependent
Natural disaster — Fire, flood, hurricane affecting your records or ability to file
IRS error — The IRS gave you incorrect advice or caused a processing delay
Inability to obtain records — Records were in the possession of a spouse, ex-spouse, or third party
Military deployment — Particularly combat zone service
Incarceration — With limited access to records and communication

Reasonable cause requires documentation — medical records, death certificates, FEMA disaster declarations, or other evidence supporting your claim.

Statutory Exceptions

Certain situations provide automatic penalty relief:

Combat zone extension — Military personnel in combat zones get automatic extensions
Federally declared disaster areas — Filing and payment deadlines are automatically extended
IRS errors — If the IRS caused the problem, penalties are automatically abated

FTA for Business Penalties

FTA applies to business penalties as well, particularly the failure-to-deposit penalty for payroll taxes. The same three criteria apply — three years clean compliance, all returns filed, and tax paid or arranged.

For businesses, the failure-to-deposit penalty can be substantial:

Deposit Lateness	Penalty Rate
1–5 days late	2%
6–15 days late	5%
16+ days late	10%
10+ days after first IRS notice	15%

FTA can eliminate the entire deposit penalty for a qualifying year, which for businesses with large payrolls can represent significant savings.

Using FTA Strategically

Since FTA resets after three clean years, timing and strategy matter:

Apply FTA to the Largest Penalty

If you have penalties for multiple years, check whether you qualify for FTA on the year with the largest penalty. You can only use FTA once per clean cycle, so maximize the benefit.

Use FTA Before Reasonable Cause

If you have both a valid FTA claim and a valid reasonable cause argument, use FTA first — it is nearly automatic and does not require documentation. Reserve reasonable cause for years where FTA is not available.

Request Retroactively

You can request FTA for penalties already assessed and even already paid. If the penalty was paid, the abated amount is refunded to you (plus interest on the refund). There is no deadline for requesting FTA, but the refund claim is subject to the normal three-year refund statute.

Check Eligibility Before Filing Late

If you know you are going to file late, check your three-year compliance history first. If you qualify for FTA, the penalty will be waived — but only if you meet all three criteria, including having all returns filed and the tax paid.

Frequently Asked Questions

Can I get FTA more than once?

Yes, but only after you have three more clean years following the year you used FTA. If you used FTA for 2022, you need clean compliance in 2023, 2024, and 2025 to qualify again for 2026.

Does FTA apply to interest too?

FTA waives interest that accrued on the penalty itself, but not interest on the underlying tax. If you owed $10,000 in tax plus a $2,000 penalty, FTA removes the $2,000 penalty and any interest charged on that $2,000 — but interest on the $10,000 tax balance continues.

Can I request FTA online?

Currently, FTA requests cannot be submitted through the IRS website. You must call or submit a written request. Check your IRS online account to verify your penalty balance and compliance history before calling.

What if the IRS agent says I do not qualify?

If you believe you meet the criteria but the agent disagrees, ask for a supervisor. Common issues include the agent seeing a penalty in your three-year history that was actually abated (and should not count against you) or looking at the wrong tax year. If you still disagree, submit a written request.

Can my tax preparer request FTA on my behalf?

Yes. A CPA, enrolled agent, or attorney with a valid Power of Attorney (Form 2848) can call the IRS and request FTA on your behalf. An authorized third-party designee (checked on your tax return) may also be able to make the request.

Does FTA work for estimated tax penalties?

No. The estimated tax penalty (IRC Section 6654) is not eligible for FTA. However, estimated tax penalties may be waived for other reasons, such as casualty, disaster, or retirement (for taxpayers over 62).

Key Takeaways

First-Time Penalty Abatement waives failure-to-file, failure-to-pay, and failure-to-deposit penalties for taxpayers with three years of clean compliance
The quickest way to request FTA is a phone call to the IRS — the agent can approve it on the spot
You must have filed all required returns and paid (or arranged to pay) the underlying tax
FTA does not apply to accuracy-related penalties, fraud penalties, or estimated tax penalties
FTA resets after three clean years — you can use it again in the future
Apply FTA to your largest qualifying penalty to maximize savings
If FTA is not available, reasonable cause is your backup option

Next Steps

Check your three-year compliance history through your IRS online account
If you have unfiled returns, file them immediately before requesting FTA — review tax filing deadlines for 2026
Understand the penalties you face in the tax penalty guide for 2026
If you owe the underlying tax and cannot pay, explore IRS payment plans
Not sure which penalty you have? See failure to file vs. failure to pay for a comparison

This article about first-time penalty abatement: get irs penalties waived provides general tax education and is not a substitute for professional tax advice. Laws and regulations discussed here may have changed since publication. Work with a licensed tax advisor for decisions affecting your specific tax situation.