What is IRS First Time Penalty Abatement (FTA), and how do I request it to remove my tax penalties?

If you've been hit with an IRS penalty for filing late or paying late, you may be able to get it completely removed through a little-known program called First Time Penalty Abatement (FTA). This is an administrative waiver the IRS offers to taxpayers with an otherwise clean compliance history.

Who qualifies for FTA:

You must meet all three requirements:

• Clean compliance history: You have not been assessed any penalties (or had them abated through FTA) for the 3 tax years prior to the penalty year.
• All required returns filed: You've filed all currently required returns, or filed a valid extension for any that aren't yet due.
• All taxes paid (or arranged): You've paid, or arranged to pay (via installment agreement), any tax currently due.

Which penalties does FTA cover?

• Failure-to-file penalty (up to 25% of unpaid tax)
• Failure-to-pay penalty (0.5% per month, up to 25%)
• Failure-to-deposit penalty (for businesses)

FTA does not remove interest charges or estimated tax penalties (Form 2210). Interest is statutory and cannot be abated except in rare cases of IRS error.

How to request FTA:

Option 1 - Call the IRS (fastest): Call 1-800-829-1040 and tell the agent you'd like to request First Time Penalty Abatement. They can check your eligibility and apply it over the phone in a single call. This works for most individual taxpayers.

Option 2 - Write a letter: Send a written request to the IRS address on your penalty notice. Include your name, SSN, the tax year, the specific penalty, and a statement that you qualify under the First Time Penalty Abatement policy. Reference IRM 20.1.1.3.6.1 (the Internal Revenue Manual section governing FTA).

Option 3 - File Form 843: Use Form 843 (Claim for Refund and Request for Abatement) if you've already paid the penalty and want a refund.

Strategic tips:

• If you qualify for both FTA and reasonable cause relief, ask for reasonable cause first. If denied, you can still use FTA. But if you use FTA first, you can't get it back for 3 more years.
• FTA resets every 3 years. If your last penalty was 4+ years ago, you qualify again.
• You can request FTA even after you've already paid the penalty. The IRS will issue a refund or credit.
• FTA applies per tax year. If you have penalties for multiple years, you can typically only abate one year.

Example: You filed your 2024 return 3 months late and owe a $1,200 failure-to-file penalty. You had no penalties for 2021, 2022, or 2023, you've filed all returns, and you've paid your tax or set up a payment plan. Call the IRS, request FTA, and the $1,200 penalty is removed. You still owe any interest that accrued, but the penalty itself is gone.