How to Waive Your Penalties with the IRS Using the First-Time Penalty Abatment

Reduce Your IRS Penalties – First-Time Penalty Abatement Waiver

Has the IRS charged you with a penalty relating to filing or paying your taxes? Have you always been compliant with the IRS in past years? If the answer is yes to both of these questions, than there may be a way for you to get your IRS penalty reduced or abated.

The First-Time Penalty Abatement Waiver (FTA) was created 13 years ago by the IRS to help administer the consistent and fair abatement of penalties, reward past compliance, and promote future compliance. The FTA can be used by first-time non-compliant taxpayers for any single tax period in which certain penalties have been assessed.

Although the First-Time Abatement was first introduced in 2001, many individuals and businesses are not aware of its existence and do not make use of it. In 2010, over 90% of individuals that would have qualified for the abatement did not receive the waiver because they did not file for it. THE IRS WILL NOT TELL YOU ABOUT IT UNLESS YOU ASK!


For individuals, an FTA may be requested for failure-to-file and failure-to-pay penalties. For businesses, an FTA may be requested for failure-to-file, failure-to-pay, and failure-to-deposit penalties. In order to qualify for a First-Time Penalty Abatement, an individual or business must meet the three clean compliance criteria. These criteria are as follows:

1.      Filing Compliance:

The taxpayer must have filed all currently required returns and they must not have an outstanding request from the IRS for an unfiled return.

2.      Payment Compliance:

The taxpayer must have paid, or arranged to pay, any tax that is due.

3.      A 3-year Clean Penalty History:

The taxpayer cannot have had penalties of a “significant” amount assessed in the prior three years on the same tax return. (In practice, any penalty is a significant amount)

If you have had a filing or payment penalty assessed against you, and you believe that you meet the preceding three criteria, you may be eligible for the first-time abatement waiver. In this case, you should contact a tax professional that can confirm that you qualify, and if so, further point you in the right direction.

In 2010, the average failure-to-pay abatement was $84, and the average failure-to-file abatement was $240. At Max Tax Agency, we will be glad to help you determine if you qualify for the first-time abatement waiver. If you have any concerns about any penalties that the IRS has assessed against you, we are here to answer your questions.