Tax Relief AnswersIRS Penalty Relief: First Time Abate and Automatic Relief
The short answer
The IRS can remove the failure-to-file, failure-to-pay and failure-to-deposit penalties, in any amount, if you meet the conditions of a policy it calls First Time Abate (FTA), which centers on a clean three-year history. You ask by phone, by letter or on Form 843; the IRS says you do not need to name FTA or send documents. The conditions are on the IRS administrative penalty relief page, last updated July 14, 2026. Interest on the removed penalty comes off automatically, but interest on the tax itself stays. Starting summer 2026, the IRS applies the same relief automatically to 2025 and later returns for people with a clean record.
Is penalty relief now automatic?
For newer returns, often yes. The IRS page announces an Automatic Exemption from Penalty (AEP) that "begins summer 2026". If you file or pay late in the current year but filed and paid on time for the three prior years, the IRS says it "won't assess penalties for failure to file, failure to pay, or failure to make a deposit", and you "don't need to contact the IRS or respond to the notice". It covers 2025 tax year returns and later, and 2026 quarterly returns and later. For older years, or if a penalty was already assessed, you still ask for First Time Abate as described below.
Which penalties, and how big they get
| Penalty | Rate the IRS charges | FTA eligible? |
|---|---|---|
| Failure to file | 5% of the unpaid tax per month or part of a month, up to 25%, reached after 5 months. Minimum $525 for returns more than 60 days late that were due after December 31, 2025, or 100% of the tax if less | Yes |
| Failure to pay | 0.5% of the unpaid tax per month or part of a month, up to 25%; 0.25% while an approved payment plan is in effect; 1% starting 10 days after a notice of intent to levy | Yes |
| Failure to deposit | Applies to employers who deposit employment taxes late | Yes |
| Estimated tax penalty | Charged when too little was paid during the year | No |
| Accuracy-related penalty | Charged on understated tax | No |
Rates are from the IRS penalties page as of October 2026. When the failure-to-file and failure-to-pay penalties apply in the same month, the IRS reduces the failure-to-file penalty by the failure-to-pay amount.
Who qualifies
The IRS page lists three conditions, all of which must hold:
- The same return type was filed on time for the prior three years (or 12 consecutive quarters for quarterly returns).
- No penalty was assessed in those years, other than the estimated tax penalty, or any penalty assessed was removed for reasonable cause.
- For businesses, the IRS did not waive the failure-to-deposit penalty four or more times.
Returns filed only once or rarely, such as event-based filings, are not eligible. You also need to be current: the IRS looks at whether the return in question is filed and whether you have paid or arranged to pay the tax.
Steps
- Read the notice. The penalty name and amount are listed, and the phone number in the top right corner is the one to call.
- Check your last three years for the same return type in your IRS online account: filed on time, and no penalties other than estimated tax.
- File the late return if it is not already filed, and pay the tax or set up a payment plan.
- Call the number on the notice and ask for the penalty to be removed under First Time Abate. The representative can often decide on the call.
- If the IRS prefers it in writing, or the call does not resolve it, send a short letter or Form 843 to the address on the notice, citing the notice number and tax year.
- If the failure-to-pay penalty was removed before the tax was fully paid, note that it can keep accruing; ask again after the balance is paid.
- If the IRS denies the request, the denial letter explains how to appeal.
What First Time Abate does not do
- It does not remove interest on the tax. Only the interest tied to the removed penalty comes off.
- It does not remove the estimated tax penalty or the accuracy-related penalty.
- It does not cover a year if a penalty was assessed in any of the three prior years for the same return type.
- It is not the only route. If you do not meet the conditions, the IRS can also remove penalties for reasonable cause (illness, disaster, records lost, a death in the family) when you show what happened and that you acted as soon as you could.
- It does not depend on how much the penalty is. The IRS page says the three penalties are eligible regardless of amount.
Penalty removal is a phone call. A company that offers to "remove your penalties" for a fee makes the same call, and the IRS applies the same three-year test.
FAQ
Which penalties can the IRS remove under First Time Abate?
The failure-to-file, failure-to-pay and failure-to-deposit penalties, in any amount. The estimated tax penalty and the accuracy-related penalty are not covered.
Do I need to send documents to get First Time Abate?
No. The IRS page says you do not need to name FTA or provide supporting documents; you request it by phone, by letter or on Form 843.
Does First Time Abate remove interest?
It removes the interest that was charged on the penalty itself. Interest on the unpaid tax, 7% per year for individuals as of the quarter starting October 1, 2026, continues until the tax is paid.
Can I get First Time Abate if I still owe the tax?
You can ask, but the failure-to-pay penalty keeps accruing until the tax is paid. Many people file, pay or set up a plan first, then request removal.