IRS First-Time Abatement: Do You Qualify, and How to Ask

First-time abatement (FTA) is an IRS administrative waiver that removes failure-to-file penalties (IRC 6651(a)(1)), failure-to-pay penalties (IRC 6651(a)(2)), and failure-to-deposit penalties for one tax year. It is not a statute. It is an internal IRS policy described in IRM 20.1.1.3.6.1, and it is the single easiest penalty relief available. You do not need to prove reasonable cause, demonstrate hardship, or write a letter. If you meet the criteria, the IRS removes the penalty. The problem is that most taxpayers do not know it exists, and the IRS does not volunteer it.

What are the qualifying criteria?

Three requirements, all of which must be met. The IRS checks compliance history, filing status, and payment status. FTA is not a one-time-ever waiver; the three-year clean-history clock resets after each use, so you can qualify again.

• 1. Clean compliance history. No penalties (or all penalties removed) for the three tax years prior to the penalty year. A penalty that was assessed and then abated counts as clean, because the IRM looks at whether a penalty “remained on the module.” A small unabated penalty will disqualify you.
• 2. Filing compliance. All currently required returns must be filed or on valid extension. “Currently required” means as of the date you request FTA, not the original due date.
• 3. Payment compliance. You must have paid, or arranged to pay, any tax due. An active installment agreement counts. An assessed balance with no payment and no arrangement to pay disqualifies you.

Which penalties does FTA cover?

FTA applies to three types of penalties:

Failure to file (IRC 6651(a)(1)): 5% of the unpaid tax per month, up to 25%. This is the penalty for filing your return after the due date (including extensions).

Failure to pay (IRC 6651(a)(2)): 0.5% of the unpaid tax per month, up to 25%. This is the penalty for not paying the tax by the original due date, even if the return was filed on time.

Failure to deposit (IRC 6656): Applies to employers who fail to make timely federal tax deposits. Graduated from 2% to 15% depending on how late the deposit is.

FTA does not apply to:

• Accuracy-related penalties (IRC 6662): The 20% penalty for negligence, substantial understatement, or substantial valuation misstatement. These require a reasonable cause defense.
• Estimated tax penalties (IRC 6654/6655): The underpayment penalty for not making quarterly estimated payments. This penalty is calculated as interest and cannot be abated under FTA.
• Information return penalties: FBAR penalties, Form 3520 penalties, Form 5471/5472 penalties, and other international information return penalties have their own abatement rules and are not covered by FTA.
• Fraud penalties (IRC 6663): FTA does not apply to fraud.

For cross-border filers, the key limitation is that FTA does not help with the international information return penalties that are often the largest part of the penalty bill. If you owe $800 in failure-to-file penalty and $25,000 in Form 5471 penalties, FTA covers the $800 but not the $25,000. The Form 5471 penalties require a separate reasonable cause argument.

How do I request FTA?

You can request FTA by phone, by letter, or on Form 843 if you already paid the penalty and want a refund. The phone call is the fastest path: the agent can verify the criteria and remove the penalty in real time, usually in a single call.

• By phone (fastest). Call 800-829-1040 (individuals) or 800-829-4933 (businesses). When you reach an agent, say: “I would like to request first-time abatement for the [failure to file / failure to pay] penalty on my [year] return.” The agent can check the criteria and apply FTA during the call. If approved, the penalty is removed and any payment already made is applied to remaining tax, interest, or refunded.
• By letter. Write to the address on the penalty notice. Reference the penalty, the tax year, and the IRM section (20.1.1.3.6.1). State that you meet the three criteria. This takes longer (8 to 12 weeks for processing) but creates a paper trail.
• On Form 843 (refund request). If you already paid the penalty and want a refund, file Form 843 requesting abatement and refund. Check the box for “first-time abatement” or reference IRM 20.1.1.3.6.1 in the explanation section. The refund statute of limitations applies: you must file within two years of the date you paid the penalty or three years from the date the return was filed, whichever is later.

If the first agent says no (some agents are not familiar with FTA), call back and try a different agent, or ask to speak with a manager. FTA is a well-established IRS policy, not a discretionary favor.

What if the IRS says no?

Two scenarios lead to a denial, and each has its own next step. If the criteria genuinely are not met, reasonable cause is the fallback. If the agent applied the criteria incorrectly, escalation usually resolves it.

• You do not meet the criteria. If you had a penalty in the prior three years that was not abated, FTA is not available. The alternative is a reasonable cause abatement request, a separate fact-based analysis requiring you to show ordinary business care and prudence. Common arguments: reliance on a professional, serious illness, natural disaster, death of a family member, or inability to obtain records. Reasonable cause is harder than FTA but covers a wider range of penalties, including accuracy-related penalties FTA does not reach.
• The agent applied the criteria incorrectly. Request a manager review or submit a written request referencing IRM 20.1.1.3.6.1. If denied, you can request an appeal to IRS Appeals. The Appeals officer will independently review the criteria.

If both FTA and reasonable cause fail, the penalty stands. You can pay and file a refund claim (Form 843), which preserves your right to take the issue to court if the refund is denied.

Should I use FTA or save it?

FTA can only be used once per three-year clean period, so the question comes up when a small penalty sits in front of a potentially larger one next year. The general rule: use FTA now. A penalty in hand is worse than a penalty that might never happen, and if a penalty does land next year, you file for reasonable cause on that one instead.

• The one exception is when you already know a larger penalty is coming (a significantly late return about to be filed, or a known substantial balance due). In that case, paying the smaller current penalty and saving FTA for the larger one can make financial sense. This is a judgment call that depends on the dollar amounts involved.

What should I do next?

Check your penalty notice. Identify whether the penalty is a failure-to-file, failure-to-pay, or something else. If it is one of the FTA-eligible penalties, check the three criteria: no penalties in the prior three years, all returns filed, tax paid or in an arrangement. If you qualify, call the IRS and request FTA. If you do not qualify (or the penalty is not FTA-eligible), prepare a reasonable cause abatement request.

Related guides:

• First-Time Penalty Abatement: How to Get IRS Penalties Removed With One Phone Call

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.