IRS First-Time Penalty Abatement: Who Qualifies, What It Covers, How to Ask
First Time Abate (FTA) is the IRS’s administrative waiver for certain failure-to-file, failure-to-pay and failure-to-deposit penalties. When we checked on November 2, 2026, the IRS page “Administrative penalty relief” said FTA applies to taxpayers with three years of timely compliance history and is transitioning to Automatic Exemption from Penalty (AEP). Below are the IRS’s criteria, the penalties covered, how the IRS says to ask, reasonable cause and interest, in the IRS’s own words.
Maintained by Archie Chang · IRS texts checked on November 2, 2026 · Methodology & sources
FTA and AEP side by side
For the return series the IRS lists for AEP (Forms 1040, 1065, 1120; Forms 940, 941, 943, 944, 945; Form CT-1), the IRS table below says AEP applies to 2025 tax year and 2026 quarterly returns and all future tax years and quarters. For earlier years and periods, and for eligible 2025 tax year and 2026 quarterly returns not considered for AEP, the IRS table says First Time Abate applies, and that taxpayers must contact the IRS to request that relief.
| Feature | First Time Abate (FTA) | Automatic Exemption from Penalty (AEP) |
|---|---|---|
| Applicable timeframe | Applies to eligible 2025 tax year and 2026 quarterly returns (not considered for AEP), plus all prior years/periods | Applies to 2025 tax year and 2026 quarterly returns, and all future tax years/quarters |
| How relief is granted | Not automatic | Automatic |
| Action required by taxpayer | Taxpayers must contact the IRS to request relief | No taxpayer action required |
| Penalty assessment | Penalty is assessed first, then later removed | No penalty assessment is made |
| Failure to Pay penalty | May continue to accrue until the tax is fully paid | Does not accrue and is not assessed on unpaid tax |
What the IRS says First Time Abate is
The IRS page calls First Time Abate (FTA) the most common administrative penalty waiver, for taxpayers with three years of timely compliance history. The IRS texts name it a little differently: IR-2023-63 (March 30, 2023) says First Time Penalty Abatement, the IRS “Penalty relief” page lists “First time penalty abate and administrative waiver” among its types of relief, and the other IRS texts quoted here say First Time Abate (FTA).
“The most common administrative penalty waiver provided by the IRS, First Time Abate (FTA), applies to taxpayers with three years of timely compliance history. However, FTA is transitioning to a new relief called Automatic Exemption from Penalty (AEP), starting Summer 2026.”
“And the IRS reminds taxpayers about the First Time Penalty Abatement policy, where taxpayers can go directly to the IRS for administrative relief from a penalty that would otherwise be added to their tax debt.”
The Internal Revenue Manual, section 20.1.1.3.3.2.1 (dated 03-29-2023), is guidance for IRS employees. It describes the origin of the waiver this way:
“This administrative waiver was implemented in 2001 for tax periods with ending dates after December 31, 2000. It is referred to as First Time Abate (FTA) and is available for penalty relief the first time a taxpayer is subject to one or more of the referenced penalties for a single return filed by the taxpayer.”
Who qualifies, as the IRS states it
The IRS page asks for a timely compliance history: the same return type timely filed for the prior three years (or 12 consecutive quarters), and either no penalty (except the estimated tax penalty) or a penalty that was later abated for reasonable cause or IRS error. Business taxpayers have two further conditions.
IRS wording
You must have a timely compliance history. This means:
- The same return type, as the original return, was timely filed for the prior three years (or 12 consecutive quarters), and
- Either no penalty (except the estimated tax penalty) was assessed or a penalty was assessed, but later abated for reasonable cause or IRS error, and
- You meet the additional criteria listed below for business returns.
In addition to the above:
- The IRS did not waive the failure to deposit penalty four or more times during the prior three years (or 12 consecutive quarters), and
- The failure to deposit penalty was not charged for Electronic Federal Tax Payment System (EFTPS) avoidance.
You cannot receive this relief for:
- Returns filed once or infrequently (i.e., event-based filing requirements), or
- The Daily Delinquency Penalty (DDP), or
- Information reporting dependent on another filing.
The same guidance for IRS employees states the look-back test and two limits this way:
IRS wording
“The taxpayer has filed the same return as the penalized return for the 3 years preceding the penalized tax period, unless there is no filing requirement for the applicable tax period (see Exception), and”
“As stated in paragraph (2), penalty relief under the FTA waiver only applies to a single tax period.”
“In addition, the FTA waiver is not applicable based solely on a taxpayer’s first request for penalty relief.”
Which penalties it covers
The IRS lists failure-to-file, failure-to-pay and failure-to-deposit penalties, with the Internal Revenue Code section for each, as eligible for relief regardless of amount under FTA or AEP.
“The following penalties are eligible for relief, regardless of amount, under FTA or the new AEP:”
| Penalty group | IRS list line |
|---|---|
| Failure to File | Tax returns – IRC 6651(a)(1) |
| Failure to File | Partnership returns – IRC 6698(a)(1) |
| Failure to File | S corporation returns – IRC 6699(a)(1) |
| Failure to Pay | When the tax shown on the return is not paid by the due date – IRC 6651(a)(2) |
| Failure to Pay | When the tax is required to be shown on a return, but was not, and that tax was not paid by the date stated in the notice or demand for payment – IRC 6651(a)(3) |
| Failure to Deposit | When the tax was not deposited in the correct amount, within the prescribed time period, and/or in the required manner – IRC 6656 |
The IRS “Penalty relief” page (page last reviewed 09-Sep-2026) lists a wider set of penalties that are eligible for penalty relief in general, including the estimated tax penalty for individuals, while the IRS reasonable cause page says reasonable cause doesn’t apply to the estimated tax penalty. The two quotes are next to each other here. The underpayment penalty calculator covers how that penalty is figured.
Penalties eligible for penalty relief include:
- Information return
- Failure to file
- Failure to pay
- Accuracy-related
- Failure to deposit
- Dishonored check
- Underpayment of estimated tax by corporations
- Underpayment of estimated tax by individuals
- Other penalties as applicable
“Reasonable cause doesn't apply to certain penalties such as the estimated tax penalty.”
IRS wording
You may be given one of the following types of penalty relief depending on the penalty:
- First time penalty abate and administrative waiver
- Reasonable cause
- Statutory exception
How to ask the IRS
The IRS page says taxpayers must contact the IRS to request First Time Abate relief, either by calling the number on the notice or letter or by sending a written statement or Form 843, and that naming FTA or attaching supporting documents is not required.
IRS wording
“Though taxpayers must contact the IRS to request this relief, you don’t need to specify FTA as the relief sought or provide supporting documents in your request for relief. The IRS will review your account information to see if you meet the requirements for FTA.”
- Call the IRS at the telephone number found on your notice or letter, or
- Send a written statement or Form 843, Claim for Refund and Request for Abatement, to the address specified in the Form 843 instructions.
“Some penalty relief requests may be accepted over the phone.”
“If we cannot approve your relief over the phone, you may request relief in writing with Form 843, Claim for Refund and Request for Abatement.”
The two IRS texts read differently. The IRS page says “taxpayers must contact the IRS to request this relief”. The Internal Revenue Manual section, written for IRS employees, says taxpayers “are not required to specifically request penalty relief under the FTA waiver to be eligible for the waiver”; the passage follows. This page sets the two side by side and leaves them as written.
IRS wording
“Taxpayers are not required to specifically request penalty relief under the FTA waiver to be eligible for the waiver. If one or more penalties eligible for relief under the FTA waiver remain after all account discrepancies have been corrected, and/or are being proposed in the course of an examination, abatement or suppression of the penalty or penalties should be made if all FTA criteria have been met.”
The IRS page “Administrative penalty relief” (page last reviewed 22-Oct-2026) does not list a fee for requesting First Time Abate relief or for AEP relief.
Automatic Exemption from Penalty (AEP)
When we checked, the IRS page described AEP as the relief FTA is transitioning to. It applies to the return series the IRS lists, not to all returns, beginning with 2025 tax year returns and 2026 quarterly returns, and the IRS page says no taxpayer response is needed.
IRS wording
“AEP begins summer 2026.”
“Under AEP, if you file or pay late in the current year but have timely filed returns and paid tax due for the three prior years (or 12 consecutive quarters for quarterly filers), you won’t be assessed a penalty.”
The following return series are eligible for AEP consideration:
- Forms 1040, 1065, 1120
- Forms 940, 941, 943, 944, 945
- Form CT-1
AEP relief begins with this tax year and quarterly returns:
- 2025 tax year returns, and subsequent
- 2026 quarterly returns, and subsequent
If you file an eligible, original return late, or pay the tax late, and IRS records show a history of timely compliance over the prior three years (or 12 consecutive quarters):
- The IRS won’t assess penalties for failure to file, failure to pay, or failure to make a deposit.
- The IRS will send you a notice explaining AEP relief was applied.
- You don’t need to contact the IRS or respond to the notice.
- You are liable for payment of any unpaid tax, interest, or other penalty assessment not subject to AEP relief.
“If you receive a notice showing an assessed penalty but believe you should have qualified for this relief, contact us.”
Reasonable cause
If the First Time Abate criteria are not met, the IRS page says a taxpayer may request penalty relief based on reasonable cause, which the IRS determines case by case. The IRS reasonable cause page says lack of funds is not, by itself, reasonable cause for failing to pay or deposit taxes due.
IRS wording
“If you don’t qualify for the relief, you may request penalty relief based on reasonable cause. The IRS will notify you of its decision.”
“Reasonable cause is determined on a case-by-case basis considering all the facts and circumstances of your situation.”
“You may qualify for penalty relief if you demonstrate that you exercised ordinary care and prudence and were nevertheless unable to file your return or pay your taxes on time.”
Examples of valid reasons for failing to file or pay on time may include:
- Fires, natural disasters or civil disturbances
- Inability to get records
- Death, serious illness or unavoidable absence of the taxpayer or immediate family
- System issues that delayed a timely electronic filing or payment
“Lack of funds. By itself, lack of funds is not reasonable cause for failing to pay or deposit taxes due. However, you may qualify for relief based on other facts and circumstances that show you used reasonable care and tried to comply with tax law.”
Interest on penalties
The IRS says it assesses interest on penalties, and that it will automatically reduce or remove the interest related to a penalty if any of the penalties are reduced or removed.
“The IRS assesses interest on penalties. Interest increases the amount you owe until you pay your balance in full. However, we'll automatically reduce or remove the interest related to a penalty if any of your penalties are reduced or removed.”
The one-time wording
The IRS’s name for the idea is First Time Abate and, in an example paragraph for IRS employees, the IRS words it as “only available one time”. The Internal Revenue Manual’s example paragraph for notifying a taxpayer reads:
“We approved your request to remove the penalties. However, we only granted penalty relief because you have a good history of filing and paying on time. This type of penalty removal is only available one time. We will base our decisions to remove any future penalties on reasonable cause criteria.”
When we checked on November 2, 2026, neither the IRS page “Penalty relief” nor the IRS page “Administrative penalty relief” used the word “forgiveness”.
Frequently asked questions
Who qualifies for IRS first-time penalty abatement?
The IRS page “Administrative penalty relief” says First Time Abate applies to taxpayers with three years of timely compliance history: the same return type was timely filed for the prior three years (or 12 consecutive quarters), and either no penalty (except the estimated tax penalty) was assessed or a penalty was assessed but later abated for reasonable cause or IRS error. Business taxpayers must also meet two more conditions the IRS lists: “The IRS did not waive the failure to deposit penalty four or more times during the prior three years (or 12 consecutive quarters)” and “The failure to deposit penalty was not charged for Electronic Federal Tax Payment System (EFTPS) avoidance.”
Which penalties can First Time Abate remove?
The IRS page lists failure to file (IRC 6651(a)(1), 6698(a)(1) and 6699(a)(1)), failure to pay (IRC 6651(a)(2) and 6651(a)(3)) and failure to deposit (IRC 6656) as eligible for relief, regardless of amount, under FTA or AEP. It also lists what cannot be relieved this way, including the Daily Delinquency Penalty and returns filed once or infrequently.
How do I ask the IRS for penalty abatement?
The IRS page says taxpayers must contact the IRS to request First Time Abate, and need not name FTA or attach supporting documents. It lists two ways: call the telephone number on the notice or letter, or send a written statement or Form 843, Claim for Refund and Request for Abatement.
What is Automatic Exemption from Penalty (AEP)?
AEP is the relief the IRS page says FTA is transitioning to, starting Summer 2026. The IRS says that under AEP, “if you file or pay late in the current year but have timely filed returns and paid tax due for the three prior years (or 12 consecutive quarters for quarterly filers), you won’t be assessed a penalty”, meaning no “penalties for failure to file, failure to pay, or failure to make a deposit”, and that AEP is applied when the original return completes processing, with no taxpayer action. “You are liable for payment of any unpaid tax, interest, or other penalty assessment not subject to AEP relief.” It applies to the return series the IRS lists for AEP consideration, not all returns: Forms 1040, 1065 and 1120; Forms 940, 941, 943, 944 and 945; and Form CT-1. The IRS says AEP relief begins with 2025 tax year returns and 2026 quarterly returns, and subsequent ones. The IRS table says FTA applies to eligible 2025 tax year and 2026 quarterly returns that are not considered for AEP, plus all prior years and periods, and that taxpayers must contact the IRS to request FTA relief.
Is there a one-time forgiveness of IRS penalties?
The IRS’s name for the one-time idea is First Time Abate. An example paragraph in the Internal Revenue Manual for IRS employees says: “This type of penalty removal is only available one time.” The IRM also says the FTA waiver is not applicable based solely on a taxpayer’s first request for penalty relief. When we checked on November 2, 2026, neither the IRS page “Penalty relief” nor the IRS page “Administrative penalty relief” used the word “forgiveness”.
What if the First Time Abate criteria are not met?
The IRS page says that a taxpayer who falls outside the relief may request penalty relief based on reasonable cause, and that the IRS will notify the taxpayer of its decision. The IRS reasonable cause page says reasonable cause is determined on a case-by-case basis and that, by itself, lack of funds is not reasonable cause for failing to pay or deposit taxes due.
Does penalty relief remove the interest too?
The IRS says it assesses interest on penalties, and that it will automatically reduce or remove the interest related to a penalty if any of the penalties are reduced or removed. The page says interest increases the amount owed until the balance is paid in full.
Related pages
Sources
Every quotation, fee, amount and date above comes from these irs.gov documents, which we saved on November 2, 2026. The date or revision each document printed is shown with it.
- Penalty relief (page last reviewed or updated 09-Sep-2026)
- Administrative penalty relief (page last reviewed or updated 22-Oct-2026)
- Penalty relief for reasonable cause (page last reviewed or updated 21-Jun-2026)
- Internal Revenue Manual 20.1.1, Introduction and Penalty Relief (IRM 20.1.1 effective 11-25-2025; 20.1.1.3.3.2.1 dated 03-29-2023; page last reviewed or updated 30-Apr-2026)
- IR-2023-63, Offer in Compromise mills (news release dated March 30, 2023)
Reviewed November 2, 2026. Sums on this page are arithmetic on the IRS’s numbers and are labelled as such.