How to Know If You Qualify for the IRS First-Time Penalty Abatement Program

Facing IRS penalties can be stressful, especially if you have otherwise been compliant with your tax obligations. In this article, we address…

• How the first-time penalty abatement program works
• The types of IRS penalties that can be waived.
• Whether penalty abatement can be applied to more than one tax year.

What Is The IRS First-Time Penalty Abatement Program? How Does It Work For Taxpayers?

The IRS First-Time Penalty Abatement Program is a program that allows the IRS to forgive certain penalties if the taxpayer has been compliant for the past three years. That means the taxpayer has filed and paid all taxes on time during the previous three years. If those requirements are met, the penalty can be forgiven without the need to show additional reasons for why the issue occurred.

Which IRS Penalties May Be Waived Under The First-Time Penalty Abatement Rules?

The penalties eligible for first-time abatement generally include:

• Failure to file a tax return
• Failure to pay taxes owed
• Failure to deposit payroll taxes or make required estimated tax payments

How Can I Determine Whether I Meet The IRS Eligibility Requirements For Penalty Abatement?

If you are seeking first-time penalty abatement, you must make sure you have filed and paid all of your taxes for the past three years.

If that is not the case and you still believe you deserve forgiveness of the penalties, you must show reasonable cause. This generally means demonstrating that something beyond your control prevented you from filing or paying. For example:

• A tax preparer failed to do what he or she should have done
• You were unavailable or otherwise unable to file and pay your taxes

In those situations, the IRS may consider penalty relief based on reasonable cause rather than first-time abatement.

Can First-Time Penalty Abatement Apply To More Than One Tax Year If Certain Conditions Are Met?

Yes, but not at the same time. If it has been more than three years since you had any prior tax issue, you may qualify again for a first-time abatement. If another issue arises more than three years later, the IRS may still honor the request as a first-time abatement, provided you have remained compliant during that period.

What Options Do I Have If The IRS Denies A First-Time Penalty Abatement Request?

If your request is denied, you have the right to appeal the decision to the IRS Appeals Division.

How Can A Tax Attorney Help Request IRS Penalty Abatement And Prevent Future Penalties?

A tax attorney understands the correct language to use when requesting penalty relief. They can also verify whether it has been more than three years since you had a prior issue and determine whether the first-time abatement applies.

If it has been less than three years, the attorney can work with you to establish reasonable cause for the problem.

To help prevent future issues, a tax attorney can also counsel you on how to:

• File returns on time
• Make estimated tax payments when required
• Arrange payment options to ensure taxes are paid on time

Still Have Questions? Ready To Get Started?

For more information on IRS first-time penalty abatement, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 271-7940 today.