This page provides general educational information only. It is not tax, legal, or financial advice. For official IRS penalty relief information, visit IRS — Penalty Relief.
What is IRS penalty abatement?
Penalty abatement is the process of asking the IRS to remove or reduce a tax penalty. The IRS assesses various penalties for late filing, late payment, failure to deposit payroll taxes, and other issues. In certain circumstances, the IRS will abate (waive) these penalties if you meet specific criteria. Abatement applies to penalties — it does not reduce the underlying tax owed or stop interest from accruing on unpaid balances.
Official source: IRS — Penalty Relief
Common IRS penalties that may be abated
Failure-to-file penalty
Assessed when a tax return is filed late. For most individual returns, this is 5% of the unpaid tax per month, up to a maximum of 25%. Source: IRS Tax Topic 653. For tax years 2023 forward, the rate and cap are the same; verify current rates on IRS.gov.
Failure-to-pay penalty
Assessed when tax is not paid by the due date. The standard rate is 0.5% of unpaid tax per month, up to 25%. Reduced to 0.25% per month only if you filed on time as an individual and have an approved payment plan (installment agreement). Sources: IRS Tax Topic 653; IRS — Failure to Pay Penalty.
Accuracy-related penalty
Generally 20% of the underpayment attributable to negligence, disregard of rules, or substantial understatement of income tax. Source: IRS — Accuracy-Related Penalty.
Grounds for penalty abatement
First-Time Penalty Abatement (FTA)
The IRS’s First-Time Penalty Abatement administrative waiver applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties for taxpayers who:
- Did not previously have to file a return, or have no penalties for the three tax years prior to the year being considered
- Filed all currently required returns or have a valid extension
- Paid (or arranged to pay) any tax currently owed
FTA is a policy waiver, not a statutory right. It is available once every three years for failure-to-file and failure-to-pay penalties on individual income tax. You can request it by calling the IRS or submitting a written request. Source: IRS — First-Time Penalty Abatement.
Reasonable cause
If you had a legitimate reason for not filing or paying on time — and you exercised ordinary business care and prudence — the IRS may abate penalties based on reasonable cause. Acceptable reasons include:
- Serious illness or death of the taxpayer or immediate family member
- Natural disaster or casualty beyond your control
- Inability to obtain records despite reasonable efforts
Reliance on a tax professional does not generally qualify as reasonable cause for late filing or late payment (IRS — Penalty Relief for Reasonable Cause). Advisor competence matters only for accuracy-related penalties. Financial hardship alone (i.e., inability to pay) is generally not reasonable cause for failure-to-pay. Source: IRS — Reasonable Cause.
Statutory exceptions
Some penalties may be abated under statutory exceptions, such as when the IRS gave you incorrect written advice in response to your written request for information. This relief has to be requested. Source: IRS — Statutory Exception.
How to request penalty abatement
- By phone: Call the IRS at the number on your notice. Explain that you are requesting First-Time Penalty Abatement or reasonable cause relief. Have your tax return history and compliance history ready.
- In writing: Submit a written request to the IRS address on your notice explaining the basis for abatement and attaching supporting documentation.
- Using Form 843: IRS Form 843 (Claim for Refund and Request for Abatement) is used to formally request abatement when the penalty has already been assessed.
What abatement does not do
- It does not reduce the underlying tax owed
- It does not stop interest from accruing on unpaid tax (interest is generally not abatable except when the IRS caused an error)
- It does not guarantee acceptance — the IRS evaluates each request
When professional help is appropriate: If you have significant penalties, if you have a documented reasonable-cause situation that is complex to explain, or if the IRS has denied an abatement request you believe is valid, a credentialed tax professional — enrolled agent, CPA, or tax attorney — can prepare and submit a well-documented abatement request or appeal a denial. Verify any California-based preparer before hiring.
Frequently asked questions
Can interest be abated?
Interest generally cannot be abated unless the IRS caused an unreasonable error or delay. Ministerial and managerial acts that caused delays may qualify under IRC Section 6404(e). Source: IRS — Interest Abatement.
Does California FTB offer penalty abatement?
Yes. The FTB may waive penalties for reasonable cause. California also offers a one-time penalty abatement under R&TC Section 19132.5. It is available only to individuals, once in a lifetime, for taxable years beginning on or after January 1, 2022, and it covers the failure-to-file penalty (RTC 19131) and the failure-to-pay penalty (RTC 19132). Source: FTB — One-Time Penalty Abatement.
How long do I have to request abatement?
There are statutory deadlines. For a refund of paid penalties, you generally have three years from the date you filed your original return or two years from the date you paid the tax, whichever is later. For abatement before payment, there is no specific deadline, but acting promptly is advisable. Source: IRS Form 843 Instructions.
If my abatement request is denied, can I appeal?
Yes. You can request consideration by the IRS Office of Appeals. Source: IRS — Appeals.
Not reviewed by a credentialed tax professional. Penalty rates and program criteria are subject to change; verify current information on IRS.gov. Official source: IRS — Penalty Relief.