Getting hit with an IRS penalty for the first time can feel overwhelming—especially if you’ve always tried to stay on top of your taxes. Whether you missed a filing deadline or couldn’t pay your full tax bill on time, the added penalties can quickly snowball and leave you feeling anxious about what comes next.
The good news? The IRS offers a one-time lifeline for taxpayers in this exact situation. It’s called First Time Penalty Abatement, and it allows eligible individuals to have certain penalties removed—no lengthy explanations or legal arguments required.
In this article, we’ll explain how the program works, who qualifies, and how to request it, so you can take the next step toward resolving your IRS balance with more confidence.
What Is First Time Penalty (FTA) Abatement?
Now that we’ve introduced the concept, let’s take a closer look at how FTA works.
FTA is a formal IRS policy that allows qualifying taxpayers to have specific penalties waived for a single tax year—specifically for filing late, paying late, or missing required deposits. It’s considered a form of “administrative relief,” and it’s granted based on your clean compliance history—not on your reason for falling behind.
This relief typically applies to:
- Failure to File penalties (missing a tax return deadline)
- Failure to Pay penalties (not paying taxes owed on time)
- Failure to Deposit penalties (for businesses behind on payroll tax deposits)
These penalties can stack up quickly—but if this is your first significant mistake, First Time Penalty Abatement gives you a chance to have them removed.
First Time Penalty Abatement vs. Reasonable Cause Penalty Abatement
In addition to FTA, the IRS offers another type of relief known as Reasonable Cause Abatement. This option is available when you can demonstrate that circumstances beyond your control prevented you from meeting your tax obligations.
Reasonable Cause may apply in situations involving:
- A serious illness or hospitalization
- A death in the family
- Natural disasters
- Unavoidable absence
- Destruction of records (e.g., due to fire or theft)
- Reliance on incorrect professional advice
To qualify, you must explain the circumstances in writing and provide supporting documentation, such as hospital records, legal documents, or insurance claims. The IRS reviews these requests on a case-by-case basis, and approval is not guaranteed.
In short, FTA is the simpler path—but it’s only available if this is your first time facing these penalties. If you don’t qualify for FTA, Reasonable Cause may still offer a path to relief.
Who Qualifies for First Time Penalty Abatement?
Not everyone is eligible for FTA. To qualify, the IRS requires that you meet three key conditions—all of which are centered around your filing history, your payment status, and your overall compliance. Here’s what each requirement really means:
1. You Have a Clean Compliance History
To qualify, you must have no significant penalties in the three tax years before the year you’re requesting abatement for.
This means no prior failure-to-file, failure-to-pay, or failure-to-deposit penalties during that period.
Minor penalties, such as estimated tax penalties, information return penalties, or small underpayment amounts, generally won’t disqualify you.
If you’ve previously used FTA, you’ll need another three clean years before you’re eligible again.
Example: If you’re requesting abatement for a 2023 tax return, the IRS will check your records for 2020, 2021, and 2022. If you had a failure-to-file penalty in 2021, you won’t qualify for FTA in 2023.
2. All Required Tax Returns Must Be Filed
You must be current on all tax return filings before the IRS will consider removing any penalties.
- This includes all individual and business returns required by law.
- Even if you’re late on a return, filing it now helps you meet this requirement.
- If you’re missing older returns, the IRS may not even consider your request until those are submitted.
Example: You forgot to file your 2022 return and are requesting FTA for 2023. The IRS will not approve your request unless you also file that 2022 return—even if no tax was owed.
3. You’ve Paid the Tax — or Made Arrangements to Pay
The IRS requires that you’ve either paid your tax balance in full, or have already entered into an approved payment plan. These payment plans are referred to as an Installment Agreement.
Many taxpayers assume they must pay everything up front, but that’s not true—setting up a payment plan is enough to qualify.
Example: You owe $3,000 in taxes for 2023 and can’t pay it all at once. If you’ve filed your return and entered into a formal payment agreement with the IRS, you’re still eligible to request FTA.
In Summary:
To qualify for First Time Penalty Abatement, you must prove that this was a one-time misstep, that you’re now caught up on all filings, and that you’re actively working to resolve any unpaid balance. Once these boxes are checked, you can move on to requesting relief.
How to Request First Time Penalty Abatement
Once you’ve confirmed that you meet the qualifications, the next step is to formally request FTA from the IRS. Fortunately, the process is fairly straightforward—and you have a few different options depending on your situation:
1. Call the IRS Directly
For many taxpayers, the simplest way to request FTA is by calling the IRS.
- The general IRS phone number is 1-800-829-1040, though business taxpayers may need to use a different line.
- Be prepared to verify your identity and explain which penalty (or penalties) you’re seeking to have removed.
- IRS representatives can often apply the abatement on the spot if you clearly meet the criteria.
Best for: Simple, one-year penalty requests where your account is otherwise in good standing.
2. Submit a Written Request by Mail
You also have the option to submit a written request to the IRS.
- Include your name, contact information, taxpayer identification number (SSN or EIN), the tax year involved, and a short statement that you are requesting First Time Penalty Abatement.
- This method is especially helpful if you’re requesting abatement for multiple penalties or want to include supporting details about your compliance history.
Best for: More complex situations or when you want written documentation of your request.
3. Respond to an IRS Penalty Notice
If you’ve already received a notice from the IRS assessing a penalty (such as a CP14 or CP501), you can request the FTA as part of your response.
- Use the notice’s reply instructions and include a short explanation requesting First Time Penalty Abatement.
- Make sure to include any identifying information from the notice (like the notice number and tax year) to ensure proper handling.
Best for: Taxpayers who have already been assessed penalties and want to respond proactively.
While the process is relatively simple, it’s important to follow the correct steps and confirm you meet the criteria before making your request. Rushing in without the right information can lead to delays—or worse, a denial. In the next section, we’ll cover some of the most common mistakes to avoid when requesting First Time Penalty Abatement.
Common Mistakes to Avoid
While FTA is one of the more accessible IRS relief programs, there are still a few common pitfalls that can cause your request to be delayed or denied. Here are the key mistakes to watch out for:
1. Assuming You Automatically Qualify
Just because it’s your first time dealing with IRS penalties doesn’t mean you’re eligible for FTA. The IRS will check your records for the past three years to ensure you haven’t been penalized previously. Always confirm your compliance history—either by reviewing your IRS transcripts or working with a tax professional—before making a request.
2. Requesting FTA More Than Once
Just as the name implies, FTA is a one-time waiver. If you’ve already used it within the past three tax years, you won’t be eligible again until you’ve re-established a clean compliance history for another three-year period.
3. Trying to Use FTA on Ineligible Penalties
FTA only applies to a specific set of penalties: failure to file, failure to pay, and failure to deposit. It does not apply to estimated tax penalties, accuracy-related penalties, or civil fraud penalties. Trying to request abatement for the wrong type of penalty is one of the most common—and avoidable—mistakes.
4. Applying Before You’ve Filed All Your Returns
Even if you meet the other qualifications, the IRS won’t grant FTA unless your account is fully up to date. That means all required tax returns—individual or business—must be filed, even if you’re still working on paying what you owe. Filing first, then requesting abatement, is the correct order of operations.
Avoiding these missteps can greatly improve your chances of having your penalties removed and resolving your IRS issue more quickly. If you’re unsure where to start, working with an enrolled agent can help you avoid costly errors and ensure you’re requesting the right form of relief.
Final Thoughts
First Time Penalty Abatement is one of the most overlooked opportunities to reduce or eliminate IRS penalties—but it only works if you meet the qualifications. If this is your first time dealing with IRS penalties, don’t panic. Relief may be more accessible than you think.
If you find yourself in a situation that requires negotiating with the IRS, the team at Andrin Tax Relief can help. Our expert enrolled agents can guide you through the process, handle the paperwork, and communicate with the IRS on your behalf—so you don’t have to navigate it alone. Contact us today to see how we can help.
