Tax Resolution Clarity
← Back to All Comparisons

First Time Abate vs. Automatic Exemption from Penalty

The IRS is replacing one with the other, and they require opposite things of the reader. One needs a request. The other needs nothing.

Quick Answer

They test the same thing and behave in opposite directions. Both turn on a timely compliance history over the prior three years, or twelve consecutive quarters for quarterly filers. But the IRS's own comparison table sets them apart on the row that decides what a reader does: First Time Abate is "Not automatic", requires that "Taxpayers must contact the IRS to request relief", and assesses the penalty first and removes it later. The Automatic Exemption from Penalty is "Automatic", requires "No taxpayer action", and makes no penalty assessment at all. So the practical question is which one your return falls under, and the IRS answers it by return year: AEP applies to 2025 tax year returns and 2026 quarterly returns onward; FTA covers those and everything before them.

1

First Time Abate (FTA)

Advantages

  • You do not have to name it. The IRS states you "don't need to specify FTA as the relief sought or provide supporting documents" — it reviews your account information.
  • It is requested by phone on the number in the top right corner of your notice, or in writing by statement or Form 843.
  • It covers failure to file under IRC 6651(a)(1), 6698(a)(1) and 6699(a)(1), failure to pay under 6651(a)(2) and 6651(a)(3), and failure to deposit under 6656.
  • The IRS states it applies to eligible 2025 tax year and 2026 quarterly returns, plus all prior years and periods.

Disadvantages

  • It requires an action. The IRS's own comparison row: "Taxpayers must contact the IRS to request relief."
  • The penalty is assessed first and removed afterwards. The IRS's row: "Penalty is assessed first, then later removed."
  • The failure-to-pay penalty "may continue to accrue until the tax is fully paid."

Best For

What it is: the administrative waiver the IRS has used for taxpayers with a timely compliance history.

Typical Cost

The IRS publishes no fee for requesting either relief.

VS
2

Automatic Exemption from Penalty (AEP)

Advantages

  • Nothing is required of you. The IRS's comparison row: "No taxpayer action required."
  • No penalty is assessed in the first place. Its row: "No penalty assessment is made."
  • The failure-to-pay penalty "does not accrue and is not assessed on unpaid tax".
  • The IRS states you receive a letter explaining that the penalties were not assessed because of your history of timely compliance.

Disadvantages

  • It reaches a defined return set: Forms 1040, 1065, 1120, 940, 941, 943, 944, 945 and CT-1.
  • It starts with 2025 tax year returns and 2026 quarterly returns, and applies to subsequent ones.
  • The IRS states it is applied when your original return completes processing, so it attaches to an original return rather than to a later request.

Best For

What it is: the relief the IRS states is replacing First Time Abate from summer 2026.

Typical Cost

The IRS publishes no fee for requesting either relief.

The Verdict

They test the same thing and behave in opposite directions. Both turn on a timely compliance history over the prior three years, or twelve consecutive quarters for quarterly filers. But the IRS's own comparison table sets them apart on the row that decides what a reader does: First Time Abate is "Not automatic", requires that "Taxpayers must contact the IRS to request relief", and assesses the penalty first and removes it later. The Automatic Exemption from Penalty is "Automatic", requires "No taxpayer action", and makes no penalty assessment at all. So the practical question is which one your return falls under, and the IRS answers it by return year: AEP applies to 2025 tax year returns and 2026 quarterly returns onward; FTA covers those and everything before them.

Frequently Asked Questions

Which one applies to me?
The IRS divides them by period. It states AEP applies to 2025 tax year returns and 2026 quarterly returns and all future ones, and that FTA "Applies to eligible 2025 tax year and 2026 quarterly returns (not considered for AEP), plus all prior years/periods". Read that row on the IRS page against the year on your notice.
Do I need to call?
For First Time Abate, yes — the IRS states taxpayers must contact it to request relief. For the Automatic Exemption from Penalty, no — it states no taxpayer action is required and that you will receive a letter explaining the relief was applied.
What is the compliance test?
The IRS states the same test for both: the same return type as the original return timely filed for the prior three years, or twelve consecutive quarters, and for that period either no penalty except the estimated tax penalty assessed, or a penalty assessed and later abated for reasonable cause or IRS error. Businesses have two further conditions on the failure-to-deposit penalty.
What if I got a notice showing a penalty and think AEP should have applied?
The IRS states: "If you receive a notice showing an assessed penalty but believe you should have qualified for this relief, contact us."

Explore More Comparisons

Currently Not Collectible vs. Installment Agreement

Currently Not Collectible (temporary delay)VSInstallment Agreement (payment plan)
Compare

Fresh Start vs. Offer in Compromise

"Fresh Start"VSOffer in Compromise
Compare

Offer in Compromise vs. Penalty Abatement

Offer in CompromiseVSPenalty relief
Compare

Ready to Take the Next Step?

Use our free tools to determine which option is best for your specific situation.

Take the Resolution QuizCalculate OIC Amount

Sources

Sourced to primary IRS materials and editorially reviewed. Not reviewed by a tax professional. Not tax advice. Report a correction.