Penalties are one of the largest and most negotiable parts of a tax debt. The failure-to-file penalty alone is 5% per month, up to 25% of the unpaid tax, and failure-to-pay adds more on top. The good news: the IRS removes (abates) billions in penalties every year for taxpayers who qualify — but the relief is rarely automatic.
First-Time Abatement (FTA)
If you have a clean compliance history for the prior three years, you may qualify for First-Time Abatement, an administrative waiver that removes failure-to-file and failure-to-pay penalties for a single period — no detailed explanation required. Many taxpayers are eligible and never claim it.
Reasonable-cause relief
When circumstances outside your control caused the problem, you may qualify for reasonable-cause abatement. Commonly accepted reasons include:
- Serious illness, hospitalization, or death in the family;
- Natural disaster, fire, or casualty;
- Inability to obtain records;
- Reliance on incorrect professional advice.
Documentation is everything
Reasonable-cause requests succeed or fail on the supporting evidence and how the narrative is framed. We assemble the proof and write the request to meet the IRS's specific standards. See IRS — Penalty Relief.
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