IRS Penalty Abatement

Penalty abatement is the removal or reduction of IRS penalties. The IRS publishes three routes to it: administrative relief, reasonable cause, and statutory exception. It addresses penalties only — the tax itself remains. For an individual return the failure-to-file penalty accrues at 5% of the tax due — less any tax paid on time and available credits — for each month or partial month the return is late, up to a maximum of 25%.

Timeline

The IRS states some penalties may be reduced or removed over the phone using the number on the notice or letter, and that a written request uses a signed statement or Form 843

Cost

No cost to request penalty abatement

How the IRS decides

The IRS states reasonable cause is determined case by case considering all the facts and circumstances, and that which reasons qualify depends on the penalty and the governing law. It also names factors that do not generally qualify on their own, including reliance on a tax professional and lack of funds.

Key Takeaways

Removes or reduces penalties, not the tax
Three published routes: administrative relief, reasonable cause, statutory exception
Interest tied to a removed penalty is removed with it; interest on the tax is not
No cost to request — by telephone, or in writing on Form 843

Best For

Situations where the same return type was filed on time for the prior three years and no penalty was assessed in that window — the timely compliance history the IRS tests for administrative relief
Late filing or payment with a reason the IRS would weigh as reasonable cause
The examples the IRS names: fires, natural disasters or civil disturbances; inability to get records; death, serious illness or unavoidable absence of the taxpayer or immediate family; system issues that delayed a timely electronic filing or payment
Accuracy-related penalties, where the IRS weighs reasonable cause and good faith separately

Requirements

1
For administrative relief: the same return type as the original return was timely filed for the prior three years (or 12 consecutive quarters), and either no penalty except the estimated tax penalty was assessed in that window, or one was assessed and later abated for reasonable cause or IRS error
2
For businesses, additionally: the IRS did not waive the failure-to-deposit penalty four or more times in that window, and the failure-to-deposit penalty was not charged for EFTPS avoidance
3
For reasonable cause: facts and circumstances showing ordinary care and prudence. The IRS decides case by case
4
Administrative relief is not available for returns filed once or infrequently, for the Daily Delinquency Penalty, or for information reporting dependent on another filing

How to Apply for IRS Penalty Abatement

Identify Penalties

Review your IRS notice or transcript to identify the specific penalties.

Check the published conditions

Read the IRS conditions for administrative relief and for reasonable cause against your own filing history. The IRS decides which, if either, applies.

Gather Documentation

Collect evidence supporting your reasonable cause claim (if applicable).

Request Abatement

Call the IRS, send a letter, or submit Form 843.

Follow Up

If denied, you can appeal or request reconsideration with additional documentation.

Advantages

The IRS states it will automatically reduce or remove the interest related to a penalty if the penalty is reduced or removed.
Relief can be requested by telephone using the number on the notice or letter, or in writing by statement or Form 843.
For administrative relief you do not have to name the relief sought or supply documents — the IRS states it reviews your account information to see whether you meet the requirements.
The IRS states that from summer 2026 an Automatic Exemption from Penalty applies with no taxpayer action: for eligible returns, where the prior three years (or 12 consecutive quarters) were timely, the penalty is not assessed at all.

Disadvantages

It removes penalties, not the tax. The IRS states it does not remove or reduce interest for reasonable cause or as first-time relief, and reduces interest on the tax itself only where an unreasonable error or delay by an IRS officer or employee caused it.
Administrative relief is not a one-time allowance, but it is not open-ended either: the IRS tests the prior three years (or 12 consecutive quarters) each time, so a penalty assessed in that window can rule it out.
Reasonable cause is decided case by case on all the facts and circumstances, and the reasons that qualify depend on the penalty and the governing law.
The IRS names factors that do not generally qualify on their own: reliance on a tax professional, lack of knowledge, mistakes and oversights, and lack of funds.
Reasonable cause does not apply to certain penalties, such as the estimated tax penalty.

Frequently Asked Questions

What is First-Time Abatement?

First Time Abate (FTA) is the IRS's most common administrative penalty waiver. It covers failure-to-file penalties under IRC 6651(a)(1), 6698(a)(1) and 6699(a)(1), failure-to-pay penalties under IRC 6651(a)(2) and 6651(a)(3), and the failure-to-deposit penalty under IRC 6656. The IRS tests a timely compliance history: the same return type timely filed for the prior three years (or 12 consecutive quarters), and either no penalty except the estimated tax penalty assessed in that window or one later abated for reasonable cause or IRS error. The IRS states FTA is transitioning to a new relief called Automatic Exemption from Penalty (AEP) starting summer 2026.

What qualifies as reasonable cause?

The IRS decides reasonable cause case by case on all the facts and circumstances, and says the reasons that qualify depend on the penalty and the law governing it. For failure to file or pay, it names as examples: fires, natural disasters or civil disturbances; inability to get records; death, serious illness or unavoidable absence of the taxpayer or immediate family; and system issues that delayed a timely electronic filing or payment. It also names four things that do not generally qualify on their own — reliance on a tax professional, lack of knowledge, mistakes and oversights, and lack of funds.

Can I get interest removed too?

Two different things. The IRS states it will automatically reduce or remove the interest related to a penalty when that penalty is reduced or removed. Interest on the tax itself is different: the IRS states it does not remove or reduce interest for reasonable cause or as first-time relief, and may reduce it only where the interest was applied because of an unreasonable error or delay by an IRS officer or employee. That is disputed on Form 843 or by signed letter.

What if my request is denied?

The IRS publishes an appeal route for a penalty relief decision, and states that if you do not qualify for administrative relief you may request relief based on reasonable cause. It notifies you of its decision either way.

Is Penalty Relief Right For You?

Read what the IRS publishes about each program. Eligibility is determined by the IRS on your full circumstances.

Take the Quiz

Other Options

OIC

Taxpayers who cannot pay their full tax liability

Payment Plan

Taxpayers with steady income who can afford monthly payments

CNC Status

Taxpayers experiencing severe financial hardship

Pay in Full

Taxpayers who have the funds available now and want to stop interest and penalties from growing further

Short-Term Plan

Taxpayers who can pay the full balance within 180 days and want to avoid any setup fee

Guaranteed IA

Individuals whose income tax liability, excluding penalties and interest, is small enough to meet the published limit

Simple Payment Plan

Individual, out-of-business sole-proprietor, or non-trust-fund business taxpayers whose balance is at or below the published threshold

Full-Disclosure IA

Balances above the Simple Payment Plan's aggregate threshold

Appeals / CDP

Someone who disagrees with a specific IRS collection action — a lien filing, a levy, or a rejected/modified/terminated installment agreement

Innocent Spouse

A joint filer who did not know about, and had no reason to know about, errors the other spouse made on a joint return

Injured Spouse

A joint filer whose share of a joint refund was applied to the other spouse's separate debt — back taxes, child support, federal student loans, or other debts subject to offset

Bankruptcy

Understanding, in general terms, what the Bankruptcy Code says determines whether an income tax debt can be discharged

Details

Timeline

The IRS states some penalties may be reduced or removed over the phone using the number on the notice or letter, and that a written request uses a signed statement or Form 843. It publishes no decision time. From summer 2026 the IRS states the Automatic Exemption from Penalty is applied when the original return completes processing, with no request and no assessment.

Costs

No cost to request penalty abatement.

How the IRS decides

Form 843 (Claim for Refund and Request for Abatement)

The written route to penalty relief, and to disputing interest caused by an IRS error or delay. One form, several unrelated uses.

First-Time Penalty Abatement (FTA)

An IRS administrative waiver that removes failure-to-file or failure-to-pay penalties for first-time offenders.

Reasonable Cause

The standard the IRS applies when deciding whether to remove a penalty. It is decided case by case on all the facts, so no page can tell you how yours will go.

Failure to File Penalty

A penalty for filing late, charged monthly against the tax due and capped at a quarter of it.

Failure to Pay Penalty

A penalty for paying late, charged monthly on the unpaid tax and capped at a quarter of it. The rate changes if you are on a payment plan.

Sources

Penalty relief for reasonable cause — Internal Revenue Service, retrieved 2026-08-21
Administrative penalty relief — Internal Revenue Service, retrieved 2026-08-21
Penalty relief — Internal Revenue Service, retrieved 2026-08-21
Interest — Internal Revenue Service, retrieved 2026-08-21
Failure to file penalty — Internal Revenue Service, retrieved 2026-08-21
Failure to pay penalty — Internal Revenue Service, retrieved 2026-08-20

Last reviewed 2026-08-21. Sourced to primary IRS materials and editorially reviewed. Not reviewed by a tax professional. Not tax advice. Report a correction.