Penalty Abatement: When and How to Request Relief

How can you get penalty abatement and request IRS relief?

Penalty abatement is a formal request to the IRS to reduce or eliminate penalties charged for late filing, late payment, accuracy issues, or other noncompliance. The IRS offers several paths to relief, the most common of which are: reasonable cause, first‑time penalty abatement (FTA), and statutory or administrative waivers. Understanding which route fits your situation and preparing clear documentation are the two most important steps for success.

This article explains the who, when, and how of penalty abatement, practical steps to prepare a request, realistic timelines, and common pitfalls to avoid. It also links to additional resources on evidence, timing, and first‑time relief.

Types of penalties commonly eligible for abatement

• Failure‑to‑file penalty (Form 1040 filed late)
• Failure‑to‑pay penalty (taxes paid after the due date)
• Accuracy‑related penalties (substantial understatement of tax due to negligence or disregard)
• Information‑return penalties (e.g., late or incorrect Forms 1099 or W‑2 in some cases)

Not all penalties are abatable. For example, penalties assessed for civil fraud are rarely abated. Each penalty type has its own rules and thresholds — the IRS explains its options on its Penalty Relief pages (see IRS guidance on penalty relief).

Three primary grounds for abatement

1. Reasonable cause

• You show that you exercised ordinary business care and prudence but were still unable to comply due to circumstances beyond your control. Typical reasons: serious illness or death in the family, natural disaster, fire, inability to obtain records, or delays caused by reliance on incorrect written advice from the IRS.
• Reasonable‑cause requests must include a clear factual narrative and supporting documents (medical records, death certificates, insurance claims, employer letters, etc.).

1. First‑time penalty abatement (FTA)

• A one‑time administrative waiver the IRS may grant if you have a clean compliance history (no penalties for the prior three years) and you have filed all required returns and paid, or arranged to pay, any tax due.
• FTA is often quicker to obtain than reasonable‑cause relief. For a guide to eligibility and the request process, see our article on First‑Time Penalty Abatement Relief.

1. Statutory or administrative exceptions

• Examples include federally declared disasters or other specific waivers the IRS announces. If your area was affected by an IRS disaster relief notice, penalties and filing deadlines may be suspended automatically for a defined period.

Step‑by‑step: How to request penalty abatement

1. Confirm the penalty details

• Review the IRS notice or account transcript to identify the penalty type, tax year, and assessment date. Note the penalty code — that helps determine the proper remedy.

1. Choose the correct relief route

• If you have a clean history and meet the criteria, pursue FTA.
• If you faced unusual hardship or circumstances, prepare a reasonable‑cause request.
• If your situation falls under an announced disaster or statutory exception, follow the IRS guidance tied to that notice.

1. Gather supporting documentation

• Build a timeline that explains what happened and when. Attach corroborating documents: medical records, hospital bills, obituary, death certificate, proof of job loss, unemployment records, police reports, insurance claims, or written advice from a tax professional. The goal is to show the link between the event and your inability to comply.

1. Draft your statement

• Provide a concise factual narrative explaining: the event, why it prevented compliance, what you did to try to comply, and why you believe the penalty is unjust. Use dates and specifics. Sign and date the statement.

1. Submit your request

• For many penalties you can request abatement by contacting the IRS telephone number on your notice, via your IRS Online Account, or by mailing a written request to the address on the notice. For certain civil penalties or refund claims, Form 843 (Claim for Refund and Request for Abatement) may be appropriate — but Form 843 is not universally required for all abatement requests. If in doubt, start with the IRS notice contact and ask which form or process applies.
• If pursuing FTA, you can often request it by phone when calling the IRS (contact information appears on notices) or through a tax professional using IRS systems.

1. Keep records and follow up

• Save copies of everything you send. The IRS may request more information. Typical processing times vary — many simple FTA requests are handled within weeks, while reasonable‑cause reviews can take 30–90 days or longer depending on complexity and IRS workload.

What to include in a reasonable‑cause statement (practical checklist)

• A clear opening sentence stating you are requesting penalty abatement and the penalty type and tax year.
• A chronological narrative of events with dates and specifics.
• A list of documents attached and brief notes on why each document supports your claim.
• Evidence of steps taken to correct the error (e.g., filed returns, payment plan established).
• Contact information and a signed statement under penalty of perjury if required by the submission method.

Real‑world examples and outcomes

• Medical emergency: A taxpayer missed the filing deadline while hospitalized; medical records, hospital bills, and a physician letter led the IRS to abate the failure‑to‑file penalty.
• Job loss and cash flow problems: A taxpayer who could not pay on time because of sudden unemployment provided unemployment paperwork and bank statements; the IRS abated the failure‑to‑pay penalty after considering the evidence and the taxpayer’s prompt action to enter a payment plan.
• First‑time abatement: A small business owner with a spotless three‑year compliance record received FTA for a one‑time late deposit penalty after contacting the IRS and demonstrating prior compliance.

These are typical outcomes but not guaranteed. The IRS evaluates facts and supporting documents on a case‑by‑case basis.

Timing and appeals

• Processing time: Simple FTA or administrative waivers can be processed quickly; reasonable‑cause claims generally take longer. Expect 30–90 days in many cases, but timelines vary.
• Denials: If the IRS denies your abatement request, you can appeal the decision. The denial letter will explain appeal rights and deadlines. Appeals generally start with a written protest or through the IRS Office of Appeals. Keep an eye on the deadline in the denial notice.

Common mistakes that reduce your chances

• Insufficient documentation or vague narratives.
• Submitting requests after the statute of limitations for assessment or refund has expired without checking alternative remedies.
• Confusing FTA eligibility with reasonable‑cause standards.
• Relying solely on verbal explanations without written support.

Alternatives and complementary strategies

• Payment plans: If abatement is denied or while waiting for a decision, consider an Installment Agreement to stop collection actions.
• Offer in Compromise: Not for penalties specifically, but for tax liabilities overall — a separate program with strict eligibility.
• Abatement plus refund claim: In some cases where you overpaid, a successful abatement can be paired with a refund claim using Form 843 or the appropriate refund claim process.

Professional help: when to call a tax pro

In my practice, complex cases (large penalties, suspected fraud designations, or denials) benefit from an experienced tax pro or CPA. Professionals can help draft persuasive reasonable‑cause statements, gather hard‑to‑assemble evidence, and navigate appeals. If the balance at stake is significant, the cost of professional help often justifies itself.

Sources and further reading

• IRS — Penalty Relief and First‑Time Abatement guidance (see the IRS penalty relief pages at IRS.gov for the latest procedures and announcements).
• IRS — “What to do if you can’t pay your taxes” for payment options and installment agreements.
• Our related guides: How to Request Penalty Abatement: Evidence, Forms, and Timing, First‑Time Penalty Abatement Relief, and Reasonable Cause for Penalty Abatement.

Final practical tips

• Act early: Address notices promptly and gather supporting documents quickly while details are fresh.
• Be factual and specific: The IRS responds to clear timelines and corroborating records, not to general claims of hardship.
• Keep compliance current: Filing past returns and making good‑faith payment arrangements strengthens your position.

This article is educational and general in nature. It is not a substitute for personalized tax advice. For tailored guidance about your specific circumstances, consult a qualified tax professional or CPA. For official IRS rules and procedural updates, consult IRS.gov and the penalty relief pages directly.