If you’ve been hit with IRS penalties, you’re not alone. Millions of taxpayers face penalties for late filing, late payment, or other issues each year.
The good news is that the IRS offers a Tax Relief service called penalty abatement. This is a type of penalty relief that may remove or reduce these charges if you qualify.
What Is IRS Penalty Abatement?
Penalty abatement is when the IRS agrees to remove certain penalties from your tax account. This doesn’t erase the original tax balance or accrued interest, but it can significantly reduce the total amount you owe.
There are a few main ways to qualify for IRS penalty relief:
- First-Time Penalty Abatement – available if you have a clean compliance history.
- Reasonable Cause – such as serious illness, natural disasters, or other circumstances beyond your control.
- Statutory Exceptions – when the IRS provided incorrect written advice.
If penalties are only one part of your tax challenges, you may also want to explore broader Tax Relief Services that combine penalty abatement with other solutions.
How to Qualify for IRS Penalty Relief
To qualify, you’ll need to show the IRS that you meet their requirements:
- First-Time Penalty Abatement (FTA): Generally available if you filed and paid on time for the last three years.
- Reasonable Cause: You’ll need documentation, such as hospital records or insurance claims, to prove why you couldn’t file or pay on time.
- Form 843 (Claim for Refund and Request for Abatement): This is the official form used to request penalty relief in writing.
Not sure if you qualify? Our guide on IRS Fresh Start Program explains how penalty abatement can work alongside installment agreements and offers in compromise.
Steps to Request Penalty Abatement
- Call the IRS: You can request abatement over the phone for some penalties.
- Submit Form 843: For more complex situations, a written request gives you the best chance of approval.
- Provide Evidence: Always include documentation that supports your case.
In some cases, penalty abatement may be combined with an Offer in Compromise to resolve your overall debt for less than the full balance.
Remember, the IRS evaluates requests on a case-by-case basis, and approval isn’t guaranteed.
When to Get Professional Help
While some taxpayers successfully request penalty relief on their own, many find it helpful to work with a tax professional. A licensed tax expert can:
- Determine whether you qualify under FTA or reasonable cause.
- Prepare a strong penalty abatement request.
- Represent you before the IRS if additional issues come up.
If your penalties are tied to larger tax problems, such as unpaid balances or audits, consider audit representation services to protect your rights and avoid costly mistakes.
IRS penalties can make an already stressful tax debt feel impossible, but penalty abatement may give you the relief you need.
If penalties aren’t your only challenge, you may also want to consider how the overall debt can be managed.
Be sure to read our post on Offer in Compromise vs. IRS Installment Agreement to understand which broader debt resolution strategy may be the best fit for your situation.
For taxpayers with significant balances, the IRS Fresh Start Program may open the door to broader solutions like streamlined payment plans or even settlement options.
In our next post, Who Qualifies for the IRS Fresh Start Program?, we explain the eligibility requirements and how they could apply to your situation.