By Jason M. Silver, Silver Law PLC
Reviewed by a Silver Law tax attorney. Last updated July 2026.
If the penalties on your IRS notice add up to more than the tax you actually owe, you’re not imagining things. Late filing and late payment penalties stack fast.
The good news is that a large share of them can come off if you know which request to make. There are two main ways to get IRS penalties removed, and starting in 2026 one of them is becoming automatic for people with a clean record. Here’s how each one works, who qualifies, and where a wrong move can cost you relief you were owed.
The word the IRS uses is abatement. It means the agency takes a penalty back off your balance, in whole or in part. You still owe the underlying tax, and usually the interest on that tax, but the penalty and the interest charged on that penalty can be removed.
It helps to know how big these get. The failure to file penalty runs 5% of the unpaid tax for each month or part of a month a return is late, up to a cap of 25%. The failure to pay penalty is smaller, 0.5% a month, but it keeps running long after the filing penalty maxes out. On a real balance, penalties can rival the tax itself, so removing them is often the single biggest dollar swing you have.
There are two doors to abatement. One is first-time abatement, which rewards a clean history. The other is reasonable cause, which looks at what actually happened to you. Most people only ever hear about the first one. Picking the right door, in the right order, is where the money is.
“Jason and his team worked very hard to help us overcome a tax problem we have had for many years, with penalties and fines mounting. We honestly thought we would never get out of this position. Not only is the problem solved, he got us a refund.”
Michael Whittemore, Scottsdale. Google review, five stars.
First-time abatement, or FTA, is an administrative waiver. You’re not arguing that you had a good excuse. You’re asking the IRS to forgive a one-off slip because your record up to that point was clean. It applies to three penalties: failure to file, failure to pay, and failure to deposit.
To qualify, three things generally have to be true.
It’s close to a reset button, and it doesn’t ask you to prove hardship or dig up old records. If you qualify, it’s usually the fastest relief there is.
Here’s the part most articles haven’t caught up to. The IRS is turning this clean-record relief into something automatic.
Starting in the summer of 2026, a program the IRS calls the Automatic Exemption from Penalty applies to 2025 tax year returns and later. If you file or pay late in a year but you have three prior years of filing and paying on time, the IRS is meant to simply not charge the penalty. Nothing to call in, nothing to mail. It happens on your account.
That’s a real shift. For years, this same relief sat behind a phone call that plenty of eligible people never made. Two things still matter, though. First, the program is new and rolling out, so how it treats your specific years is worth confirming instead of assuming. Second, automatic relief going forward does nothing for penalties already sitting on older years. Those you still have to ask for the older way, through first-time abatement or reasonable cause. That gap, between what falls off by itself and what you have to claim, is exactly where people leave money on the table.
What if your prior three years aren’t clean, or you’d rather save your first-time abatement for later? Then you look at reasonable cause. This is the door for people who fell behind for a real reason. The IRS lists the kinds of circumstances that count:
One thing the IRS is blunt about: running short on money, by itself, is not reasonable cause for paying late. You have to show you used ordinary care and still couldn’t comply. Reasonable cause lives or dies on documentation. The hospital record, the death certificate, the insurance claim from the fire, the letter showing you asked for records and couldn’t get them. A strong file is the whole game.
“Most people reach for first-time abatement because it feels like the easy button, and sometimes that’s exactly the wrong move. If you had a genuine reason you fell behind, a death in the family, an illness, records you couldn’t get, we lead with reasonable cause and keep the first-time waiver in your pocket. You only get the clean one so often. I’d rather spend it on the year that really needs it.”
– Jason M. Silver, Silver Law PLC
For first-time abatement, the request is refreshingly light. You call the number in the top right corner of your notice, or you send a written statement or Form 843, the Claim for Refund and Request for Abatement. You don’t even have to name first-time abatement or attach proof. The IRS pulls your account and checks whether you qualify.
Reasonable cause takes more. You write out what happened, tie it to the period you missed, and attach the records that back it up. Form 843 is the usual vehicle there too.
If the IRS says no, that isn’t the end. You can take a penalty dispute to the IRS Independent Office of Appeals, and a denial you think is wrong is often worth pushing. The write-up you send carries more weight than people expect.
▎ Panic set in when I started reading and realizing all of the penalties and interest we could be facing… Jason enrolled us in the Arizona voluntary disclosure program where all $5k in assessed penalties were waived. In addition, Jason secured a first time abatement for our 2022 Federal return and approximately $4k in interest and penalties were waived.
Chris Ranno, Scottsdale. Google review, five stars.
Not every penalty is a late-filing charge. Some come out of an audit and are tied to the position you took on the return. An accuracy penalty is charged as a percentage of the tax the IRS says you understated. A civil fraud penalty is far larger. And when payroll taxes are involved, a trust fund recovery penalty can be assessed personally against an owner or officer for the full unpaid amount.
These are a different fight. First-time abatement and reasonable cause usually aren’t the tool. You beat these by challenging the underlying finding, through the audit, through Appeals, sometimes through Tax Court. The dollars are bigger, and so is the reason to have someone who has argued them before you decide how to respond.
First-time abatement is a federal program. It applies to what you owe the IRS, not to a state balance. In Arizona, income tax and transaction privilege tax are handled by the Arizona Department of Revenue, which runs its own assessment, penalty, and collection process. A federal waiver does nothing for an Arizona bill, and the reverse is true too.
The state has its own relief avenues, including a voluntary disclosure program that can wipe out penalties for people who come forward before the state finds them. If you owe on both sides, the smart play is to work them together, because the timing and the paperwork interact. A Scottsdale tax attorney who handles both can keep one from tripping the other.
You can request first-time abatement yourself, and if the automatic program already covers your year, you may not have to do anything at all. The reason people call is everything around the edges. Whether reasonable cause is stronger than the first-time waiver and worth saving the waiver for. How to write a reasonable cause request the IRS will actually accept. What to do when a penalty is tied to an audit. When a denial is worth appealing.
The attorneys at Silver Law are former IRS attorneys, so they’ve read these requests from the other side of the desk. They know which reasons the IRS respects, which ones it waves off, and how to keep a small penalty problem from turning into a collection problem.
If a notice full of penalties just landed, don’t pay it as if the number is final, and don’t ignore it either. Many of those penalties can come off. Call Silver Law PLC at (480) 429-3360 or contact us for a confidential look at your notice. We’ll tell you which door fits, first-time abatement or reasonable cause, and whether the new automatic relief already has you covered.
Abatement is the IRS’s word for taking a penalty back off your account, either part of it or all of it. You still owe the underlying tax, and generally the interest on that tax, but the penalty and the interest that was charged on the penalty can be removed. Since late filing and late payment penalties can grow past a quarter of the tax you owe, getting them abated is often the largest single reduction available on a tax bill.
First-time abatement covers three of the most common penalties: failure to file, failure to pay, and failure to deposit. It doesn’t cover penalties that come out of an audit, like the accuracy or civil fraud penalties, and it doesn’t cover the estimated tax penalty. For those, you’re looking at reasonable cause or at challenging the underlying finding through Appeals.
Three things generally need to be true. Your prior three years are clean, meaning no penalty on the same type of return. Every return you’re currently required to file has been filed. And the tax for the year you’re asking about is paid or on a payment plan. If all three fit, you usually qualify, and you don’t have to prove any hardship to get it.
The IRS has said so. Starting in the summer of 2026, a program called the Automatic Exemption from Penalty applies to 2025 returns and later. If you have three prior years of filing and paying on time, the IRS is meant to skip the penalty without you asking. Because it’s new, it’s worth confirming how it applies to your specific years, and it doesn’t clear penalties already assessed on older ones.
The fastest route is to call the toll-free number in the top right corner of your IRS notice and ask for the penalty to be removed. You can also mail a written request or Form 843, the Claim for Refund and Request for Abatement. For first-time abatement you don’t have to attach proof. For reasonable cause you do, so give yourself time to gather records before you send it.
It isn’t strictly once in a lifetime, but it rewards a clean run. Because qualifying turns on having three penalty-free years before the year you’re abating, using it resets that clock. That’s why timing matters. Spending the waiver on a small penalty this year can leave you without it for a larger penalty later, which is why reasonable cause is sometimes the better tool to use first.
The IRS looks for circumstances beyond your control that stopped you from filing or paying on time even though you used ordinary care. Examples it names include fires and natural disasters, a death or serious illness in the family, an inability to get records, and system issues that delayed an electronic filing. Running short on cash, by itself, doesn’t count for paying late. Documentation is what carries a reasonable cause request.
Partly. When a penalty comes off, the interest that was charged on that penalty comes off with it. The interest on the underlying tax is different. It keeps running until the tax is paid, and the IRS generally won’t abate it unless the interest was caused by an IRS error or delay. That’s one more reason getting the tax itself resolved, not just the penalty, matters.
A denial isn’t the last word. You can take the dispute to the IRS Independent Office of Appeals, which reviews penalty decisions separately from the people who made them. Many denials come down to how the request was written, so a clear, well-documented appeal has a real shot. This is a common point where people bring in a tax attorney.
Usually not through first-time abatement. Audit penalties, like the accuracy penalty or the civil fraud penalty, are tied to the position on your return, so you fight them by challenging the finding itself rather than asking for a clean-record waiver. That’s done through the audit, through Appeals, and sometimes in Tax Court, and it’s worth having representation for.
Arizona penalties are separate from federal ones. The Arizona Department of Revenue runs its own income tax and transaction privilege tax, with its own penalties and its own relief, so a federal first-time abatement doesn’t touch a state balance. Arizona does have its own avenues, including a voluntary disclosure program that can waive penalties for people who come forward first. If you owe on both, it’s best to handle them together.
In most cases, yes. First-time abatement generally requires that the tax is paid or on a payment plan, so paying it or setting up an agreement can be what makes you eligible. Paying also stops more failure to pay penalty and interest from piling on. If you can’t pay in full, a payment plan or an offer in compromise is usually better than letting the balance sit.
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