When people see their IRS balance, they are often shocked at how much of it is penalties rather than the original tax. The failure-to-file penalty alone can reach 25% of what you owe. The encouraging news is that penalties are also one of the most removable parts of a tax debt — if you know how to ask. There are two main paths: First-Time Abatement and reasonable cause.
The penalties that can be removed
| Penalty | Rate | Cap |
|---|---|---|
| Failure to file | 5% per month | 25% of unpaid tax |
| Failure to pay | 0.5% per month | 25% of unpaid tax |
| Estimated tax penalty | Varies | Harder to abate |
Failure-to-file and failure-to-pay penalties are the usual targets for penalty abatement. Interest is statutory and harder to remove on its own — but when a penalty is abated, the interest charged on that penalty comes off too.
Path 1: First-Time Abatement (FTA)
First-Time Abatement is an administrative waiver — no sympathetic story required. You generally qualify if:
- You had no penalties for the three tax years before the one in question;
- You have filed all currently required returns (or an extension); and
- You have paid or arranged to pay any tax due.
FTA applies to a single tax period and is widely available — yet many taxpayers never claim it simply because they do not know it exists. It is often the quickest win in a case. The IRS describes it under Penalty Relief.
Path 2: Reasonable-cause relief
When something outside your control caused the late filing or payment, you can request reasonable-cause abatement. The IRS weighs whether you exercised "ordinary business care and prudence" but still could not comply. Commonly accepted causes include:
- Serious illness, hospitalization, or death of you or an immediate family member;
- A natural disaster, fire, or other casualty;
- Inability to obtain necessary records;
- Reliance on erroneous written advice from a tax professional or the IRS.
Evidence wins these
Reasonable-cause requests are approved or denied based on documentation and how clearly the timeline connects the cause to the failure. Medical records, insurance claims, and dated correspondence make the difference.
How to request abatement
Depending on the situation, abatement can be requested by phone, by written request, or with Form 843. The approach matters: leading with FTA when you qualify is often faster, while reasonable cause needs a well-built written case. If a penalty was already paid, you can still request a refund of it within the time limits.
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Removing penalties can meaningfully shrink your balance and, combined with an installment agreement or settlement, make the whole debt manageable. Because First-Time Abatement is essentially relief you are entitled to, the only real mistake is never asking. Start with a free review of your account.
Frequently Asked Questions
About the author
This article was written by the certified tax team at US Certified Tax Services — IRS enrolled agents and tax professionals who resolve federal and state tax debt every day. It is general information, not legal or tax advice. For guidance on your specific situation, request a free consultation.