First-Time Penalty Abatement: How to Get IRS Penalties Waived

One phone call can erase thousands in penalties if you have a clean record. Here is exactly how first-time abatement works and how to ask.

What it waives

First-time penalty abatement (FTA) is an administrative waiver the IRS grants for failure-to-file, failure-to-pay, and failure-to-deposit penalties. It does not cover accuracy-related penalties, fraud penalties, or interest itself, though wiping out a penalty also wipes out the interest that accrued on that penalty. For a taxpayer facing a $5,000 combined penalty, FTA is routinely worth a single phone call.

The three requirements

First, a clean penalty history: no penalties of the same type in the prior three tax years (penalties that were assessed and later removed for reasonable cause do not count against you). Second, all required returns filed: every return due must be filed, including the one with the penalty. Third, current compliance: you have paid, or arranged to pay through an installment agreement, all tax currently due. Miss any prong and the request fails.

The clean-history test looks back three years from the tax year of the penalty, not from today. A penalty in 2021 does not block FTA for a 2025 penalty if 2022 through 2024 are clean, because the lookback covers the three years before the penalty year.

How to request it

The fastest route is calling the IRS at the number on your notice and asking for first-time abatement by name. Have the notice, the tax year, and your compliance facts ready. Many representatives can grant it on the spot if you clearly meet the three tests. The alternative is writing to the address on the notice, citing the penalty, the tax year, and your clean record. Either way, request it after you are fully compliant: file everything, pay or set up the agreement first, then ask.

If the phone representative denies it, ask for the denial in writing and appeal. FTA denials can be taken to the Independent Office of Appeals, where a fresh reviewer applies the same three tests. Some denials happen because the representative misapplied the lookback period, so double-check the math before accepting a no.

When FTA is not available

FTA is once per taxpayer in the practical sense: after you use it, the next penalty needs reasonable cause, a harder standard requiring facts like serious illness, natural disaster, or reliance on professional advice that proved wrong. Reasonable cause is argued on Form 843 with documentation; FTA needs no sob story, just the clean record. Businesses get FTA for failure-to-deposit penalties too, under the same three-prong test.

Note the ordering trap: if you have both a plausible reasonable-cause argument and a clean record, use FTA first and save the reasonable-cause facts for later. FTA is the easier win and does not burn your reasonable-cause credibility.

State penalties

Many states have their own first-time abatement analogues with similar clean-record tests. California, New York, and others will waive late penalties for first-time offenders on request. Ask the state agency directly; the federal waiver does not automatically flow through, and state interest rules differ.

Sources: IRS Internal Revenue Manual 20.1.1.3.6.1 (first-time abate); Form 843 instructions. Data current as of October 2026. Not tax advice.

Frequently asked questions

What is first-time penalty abatement?

An IRS administrative waiver that removes failure-to-file, failure-to-pay, and failure-to-deposit penalties for taxpayers meeting a three-prong clean-record test. No showing of hardship is required.

What are the requirements for first-time abatement?

No same-type penalties in the prior three years, all required returns filed, and all currently due tax paid or under an installment agreement.

How do I request first-time penalty abatement?

Call the IRS number on your notice and ask for it by name, or write to the notice address. Get compliant first: file everything and pay or arrange payment, then ask.

Does first-time abatement remove interest?

Not directly, but removing the penalty also removes interest charged on that penalty. Interest on the underlying tax remains.

What if my first-time abatement request is denied?

Ask for the denial in writing and appeal to the Independent Office of Appeals. Check the three-year lookback math; misapplied lookbacks are a common error.