First-Time Penalty Abatement: How to Erase IRS Penalties With One Request

The IRS grants FTA when all three of these are true, per its administrative penalty relief rules:

1. Clean three-year history. For the same return type, you had no failure-to-file, failure-to-pay, or failure-to-deposit penalty assessed in the three tax years before the year the penalty hit, or any penalty that was assessed got removed for reasonable cause or IRS error. An estimated tax penalty in a prior year does not disqualify you.
2. Filing compliance. You have filed all currently required returns, or filed valid extensions. If returns are missing, fix that first: our guide to catching up on unfiled returns covers the order of operations.
3. Payment compliance. You have paid the tax due, or have an arrangement in place, such as a current installment agreement you are not behind on.

Note what is not on the list: any explanation of why you filed or paid late. FTA is earned by your track record, not your story.

One timing point worth real money: the failure-to-pay penalty keeps accruing until the tax is fully paid, up to its 25 percent cap. If you request FTA while a balance is still growing, the IRS may abate what has accrued so far and the penalty resumes on the remaining balance. Waiting to request abatement until after the underlying tax is paid off removes the whole thing at once. How these penalties stack in the first place is covered in penalties and interest explained.

There are three routes, in ascending order of formality:

1. Phone. Call the number in the top right corner of your penalty notice. State that you are requesting first-time abatement under the IRS administrative waiver. The representative runs a compliance check on the spot and can often approve it during the call. Have on hand: the notice, the tax year and penalty type, and your filing and payment status. If the amount is over the phone-approval threshold, the representative will tell you to submit the request in writing.

2. Written request. A short letter to the address on your notice, identifying the taxpayer, the tax year, the penalty, and the basis (first-time abatement; reasonable cause in the alternative, described below).

3. Form 843. Form 843, Claim for Refund and Request for Abatement, is the formal vehicle, and the right one when the penalty has already been paid and you want the money back.

You do not need letterhead or legal boilerplate. You need these elements, in this order:

1. Identification. Name, taxpayer identification number, tax form, tax period, and the notice number you are responding to.
2. The exact penalties at issue. Name each one (failure to file, failure to pay, failure to deposit), the amount, and the year.
3. The FTA request. One paragraph stating that you meet the administrative waiver criteria: no penalties in the prior three years for this return type, all required returns filed, tax paid or an arrangement in place.
4. The reasonable-cause alternative. If circumstances contributed, briefly state what happened, when it happened, how it prevented timely filing or payment, and what you did to comply as soon as you could.
5. The documentation list. Reference attached evidence: hospital records, insurance claims, death certificate, disaster declaration, correspondence.
6. The ask. Request abatement of the listed penalties and the associated interest, and a refund of any amounts already paid.
7. Signature under penalty of perjury if filing on Form 843, which includes the declaration.

Reasonable-cause abatement removes the same penalties for taxpayers who cannot pass the clean-history test but can show they exercised ordinary care and were prevented from complying. The IRS lists the recognized grounds:

• Death, serious illness, or unavoidable absence of the taxpayer or an immediate family member. Document with medical records showing dates.
• Fire, casualty, natural disaster, or civil disturbance. Document with insurance claims, FEMA declarations, or photos.
• Inability to obtain records needed to file, for reasons outside your control.
• System issues that blocked a timely electronic filing or payment.

The standard is factual, not emotional. The IRS looks for a timeline: what happened, when, how it prevented compliance, and how quickly you complied once the obstacle cleared. A gap between the event and the eventual filing is the most common reason these requests fail. One more trap: relying on a preparer or advisor to file for you is generally not reasonable cause, because the law treats filing as your own non-delegable duty, though reliance on wrong professional advice about a substantive tax question can qualify.

Interest follows the penalty, not your request. When the IRS abates a penalty, it automatically removes the interest that accrued on that penalty. But underpayment interest on the tax itself is statutory: the IRS cannot abate it for hardship or fairness, only in narrow cases involving IRS errors or delays. Anyone who promises to make your interest disappear is describing a service that does not exist. The realistic play is to remove the penalties, which stops interest compounding on them, and pay down the principal as fast as your budget allows.

Taxpayers with several penalty years can combine tools. FTA applies to a single period, so use it where it buys the most: typically the earliest year with the largest penalty, since a granted FTA for that year does not depend on the later mess, while later years fail the clean-history test because of the earlier one. Then argue reasonable cause for the remaining years, where one continuous hardship (a multi-year illness, a business collapse) can cover several periods with one documented narrative.

Sequencing matters and the amounts can be large, especially when failure-to-file penalties hit the 25 percent cap across multiple years. If penalties across several years are in play, this is a place where a free consultation with a resolution specialist on our team can map which year gets which argument before anything is submitted. The related question of what happens to the underlying balance is covered in our payment plan guide.