Overview

Penalty abatement gives taxpayers a formal path to have certain IRS penalties reduced or removed. Relief commonly comes through three routes: First‑Time Abatement (FTA), reasonable‑cause (also called “reasonable cause and not willful neglect”), and administrative or disaster relief. Choosing the right route and supplying organized evidence are the keys to success. For IRS guidance, see the IRS penalty relief page (IRS, “Penalty Abatement/Relief”): https://www.irs.gov/businesses/small-businesses-self-employed/penalty-abatement.

When should you ask for penalty abatement?

  • Right after you receive a penalty notice (don’t wait). The notice will include a penalty code and an address or phone number. If a tax balance also exists, pay what you can or set up a payment plan to limit further accrual of interest.
  • If you have a qualifying history (for FTA) or a documented, reasonable cause (medical emergency, natural disaster, death in family, reliance on incorrect professional advice, etc.).

What kinds of penalty relief exist?

  • First‑Time Abatement (FTA): An administrative waiver available to taxpayers with a recent clean compliance history. Typical IRS criteria include no penalties in the prior three years, required returns filed, and tax paid or an arrangement to pay. (See IRS guidance on administrative relief.)
  • Reasonable‑Cause Relief: Granted when a taxpayer shows that circumstances beyond their control prevented timely compliance. Provide a clear timeline, cause, and documentation.
  • Administrative or Disaster Relief: The IRS sometimes issues blanket relief for disaster areas or systemic IRS errors.
  • Statutory or Special Relief: Certain penalties may be waived under specific statutes or unique IRS programs.

For deeper examples and documentation strategies, see FinHelp’s step‑by‑step documentation guide: How to Request Penalty Relief: Step‑by‑Step Documentation.

Step‑by‑step: How to request abatement

  1. Confirm the penalty and reason code
  • Read the IRS notice carefully. It will list the penalty type and often a code or explanation. Keep that notice with your records.
  1. Decide the best relief route
  • If you have an otherwise clean record, consider FTA. If you experienced an uncontrollable event, pursue reasonable‑cause relief. If the IRS made an administrative error, request administrative relief.
  1. Gather documentation
  • Build a timeline and collect supporting documents: medical records, hospital bills, police reports, insurance claims, death certificates, proof of fire/flood, business records, correspondence showing reliance on incorrect written advice, or proof of timely mailing.
  1. Prepare your request
  • For many abatement requests, a well‑written cover letter that explains: (a) what happened, (b) the dates involved, (c) why the failure was beyond your control, and (d) what documents you’re attaching is sufficient. Use concise language and a clear timeline.
  • Use Form 843, “Claim for Refund and Request for Abatement,” when the IRS instructions call for it (see Form 843 details: https://www.irs.gov/forms-pubs/about-form-843). Not all abatement requests require Form 843; some can be made by letter or by phone (especially FTA).
  1. Submit the request
  • Mail your documents to the address on the penalty notice or the address listed in IRS instructions for your specific request. For FTA, you can often call the number on the notice or request relief through your IRS online account or through the practitioner who represents you.
  1. Keep copies and follow up
  • Keep certified copies of everything you sent and track the mail if you mailed the package. Note the date you called or mailed the request and follow up after 30–60 days if you haven’t heard back. Use your IRS Online Account to check status when possible.

What to include in your abatement packet (checklist)

  • Copy of the IRS penalty notice(s)
  • A concise cover letter stating the relief requested and the penalty codes
  • A chronological statement recounting events leading to the failure to file/pay
  • Supporting documents (medical records, death certificate, court orders, disaster declarations, flight or hospitalization records, proof of timely mailing, bank statements, or correspondence showing incorrect professional advice)
  • Completed Form 843 if the IRS instructions require it
  • Your contact information and daytime phone number

How the IRS evaluates reasonable cause

The IRS looks for whether you exercised ordinary business care and prudence but were nevertheless unable to comply. Helpful elements of a reasonable‑cause claim include:

  • A specific, non‑speculative reason for noncompliance (e.g., serious illness)
  • Documentation that the event occurred and its timing
  • Evidence you acted promptly once the event ended (e.g., filed late but once recovered)
  • A prior record of compliance when relevant

For additional evidence examples and templates, see FinHelp’s practical guidance on building a reasonable cause packet: How to Request a Penalty Waiver for Reasonable Cause.

Common mistakes to avoid

  • Waiting too long: Don’t delay. While exact deadlines vary, respond quickly to notices and file any required forms.
  • Sending weak evidence: Unsupported statements are rarely persuasive. Always attach copies of primary documents.
  • Forgetting to address interest: Abatement removes penalties, not interest. Interest on unpaid tax generally continues to accrue until the tax is paid (see IRS interest rules: https://www.irs.gov/payments/interest-rates).
  • Failing to consider alternative remedies: If the IRS denies your abatement, you may have appeal options or the Taxpayer Advocate Service may help.

If the IRS denies your request

  • Review the denial letter carefully: it will explain the reason for denial and your appeal rights.
  • Request an administrative appeal through the IRS Office of Appeals (see https://www.irs.gov/appeals) if you believe the decision was incorrect.
  • If you have experienced a delay or face economic harm, contact the Taxpayer Advocate Service for independent help (https://taxpayeradvocate.irs.gov/).

Real‑world examples (brief)

  • Medical emergency: A small business owner hospitalized for several weeks missed payroll‑tax deposits and filing deadlines. By submitting medical records, treatment dates, and a timeline, we secured relief for penalties though the tax balance required an installment arrangement.
  • First‑Time Abatement: A taxpayer with three years of clean filings missed a return during a busy move. After applying for FTA and paying the outstanding tax, the IRS removed the failure‑to‑file penalty.

Professional tips from practice

  • Be concise and organized: A one‑page timeline plus 2–4 pieces of core evidence is often more persuasive than a disorganized 30‑page packet.
  • Attach the IRS notice: Always include the notice so the IRS can match your request to the account.
  • Use a tax professional for complex cases: Appeals, large penalties, payroll penalties, and cases involving multiple years can benefit from professional representation.

Where to find authoritative help

You can also read related FinHelp articles on practical steps and documentation strategies:

Bottom line

Penalty abatement is achievable when you match the correct relief path to a clear, well‑documented explanation. Start early, gather focused evidence, consider Form 843 when required, and remember that penalties, not interest, are the usual target of abatement. If your case is complicated or involves large payroll or corporate penalties, consult a tax professional or the Taxpayer Advocate Service.

Disclaimer: This article is educational and does not constitute tax advice. Every case is unique—consult a qualified tax professional for advice tailored to your situation. Authoritative IRS guidance cited above is current as of 2025.