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IRS First-Time Penalty Abatement — Waive Late-Filing and Late-Payment Penalties With One Call

Difficulty Easy Risk Low Applies To All (federal program) Potential Savings $100–$10,000+ depending on the penalty assessed Last Verified 2026-01-01

IRS First-Time Penalty Abatement — Waive Late-Filing and Late-Payment Penalties With One Call

What Is It?

The IRS will waive certain penalties — including the failure-to-file penalty (5% per month, up to 25%), the failure-to-pay penalty (0.5% per month, up to 25%), and the failure-to-deposit penalty for employment taxes — if you qualify for First-Time Penalty Abatement (FTA). This is a one-time administrative waiver that requires no paperwork and can often be resolved in a single phone call to the IRS.

The IRS established FTA under its administrative penalty relief authority and codified the criteria in Internal Revenue Manual § 20.1.1.3.6.1. It is entirely legal, explicitly sanctioned, and widely underused — the IRS does not proactively tell you that you qualify.

Do I Qualify?

  • You have not been assessed the same type of penalty (failure-to-file, failure-to-pay, or failure-to-deposit) in any of the three prior tax years
  • You have filed all currently required returns, or filed a valid extension
  • You have paid — or entered into an installment agreement to pay — any tax currently owed

FTA is available for individuals, businesses, and estates/trusts on Form 1040, 1120, 1120-S, 1065, and 941/944 series returns.

How to Request It

By phone (fastest):

  1. Call the IRS at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).
  2. Tell the representative: “I’d like to request first-time penalty abatement under the IRS’s administrative waiver program for the [failure-to-file / failure-to-pay] penalty assessed for tax year [YEAR].”
  3. The representative will verify your three-year compliance history in real time. If you qualify, abatement is typically granted on the spot and confirmed in writing within a few weeks.

By letter (if denied by phone or penalty is on a notice): Write to the address on your penalty notice. State the penalty type, tax year, and amount; assert that you meet all three FTA criteria; and cite IRM § 20.1.1.3.6.1. Keep it to one page.

Via Form 843: If you have already paid the penalty and want a refund, file Form 843 (Claim for Refund and Request for Abatement) within three years of the original return due date or two years of payment, whichever is later.

What Most People Don’t Know

  • You can stack FTA with reasonable cause relief. If you don’t qualify for FTA (e.g., you had a prior penalty), you may still qualify for abatement based on reasonable cause — serious illness, natural disaster, or reliance on incorrect professional advice. These are separate grounds.
  • FTA only applies to the first year of a multi-year penalty. If you owe penalties for 2022, 2023, and 2024, FTA typically covers only the earliest year (since a penalty in that year disqualifies the subsequent years).
  • Interest is not abated. The IRS only waives the penalty itself, not the interest that accrued on the penalty. However, once the penalty is removed, interest on the penalty also stops.
  • The three-year lookback is per penalty type. A failure-to-file penalty in a prior year does not disqualify you from FTA for a failure-to-pay penalty, and vice versa.
  • State penalties are separate. Most states have their own abatement programs with different criteria. Contact your state tax agency separately.
  • 26 U.S.C. § 6651 — Failure to file or pay penalties (what FTA abates)
  • 26 U.S.C. § 6656 — Failure to deposit penalty
  • 26 U.S.C. § 6724 — Penalty relief for reasonable cause (separate ground)
  • IRS Internal Revenue Manual § 20.1.1.3.6.1 — First-Time Abate (FTA) administrative waiver criteria
  • IRS Policy Statement 3-2 — IRS’s general policy of treating taxpayers fairly and considering history of compliance

Frequently Asked Questions

How do I know if I’ve had a penalty in the prior three years?

Call the IRS at 1-800-829-1040 and ask for your Account Transcript for the relevant tax years, or request it online at irs.gov/individuals/get-transcript. The transcript will show any assessed penalties. You can also ask the IRS representative directly when you call to request abatement — they will look it up for you.

Can I use FTA more than once in my lifetime?

Yes, but not for back-to-back years. Once you receive FTA for a given penalty type, that year’s penalty becomes part of your three-year history, so you must maintain clean compliance for another three years before qualifying again. There is no lifetime cap, but you can only receive FTA once per three-year rolling window per penalty type.

What if the IRS denies my request over the phone?

Ask the representative to note the denial in your account and request the reason in writing. You can then submit a written request citing IRM § 20.1.1.3.6.1 directly, or escalate to the IRS Office of Appeals if you believe you were wrongly denied. The Taxpayer Advocate Service (1-877-777-4778) can also assist if you are experiencing hardship.

Does FTA work for partnership or S-corp late-filing penalties?

Yes. FTA applies to Forms 1065 (partnerships) and 1120-S (S corporations). These returns carry a per-partner/per-shareholder late-filing penalty of $245/month (indexed for inflation), which adds up quickly for entities with multiple partners. The same three-year compliance history requirement applies at the entity level.

Can I request FTA if I’m currently on an installment agreement?

Yes. Being on an installment agreement satisfies the “arranged to pay” requirement. You do not need to have paid the full balance before requesting abatement — you simply need a formal arrangement in place.

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