Yes. Sometimes.
The IRS has set ways to reduce or remove a penalty. It publishes all of them. But there are catches. You usually have to ask. It depends on which penalty you were charged, and why. And it does not touch the tax you owe, only the penalty.
Working out which route fits you is most of the job. That is the part we do for clients. We read your IRS transcripts, we see what your account will actually support, and we tell you what is worth asking for. If you would rather not work it out alone, we can do that part for you.
First, check the penalty is right
Before you ask to have a penalty removed, check that it belongs there at all.
This is the first thing we do on a new case. We pull your transcripts and match the penalty to your account. It is dull work, and it is worth doing before anyone argues about anything.
The IRS says the same thing. Start with the notice. If something on it is wrong, follow the instructions on the notice. If you can clear up the problem, the penalty may not apply. IRS: Penalty relief
Most people ask about the two late penalties.
- Filing late. Generally 5% of the unpaid tax for each month or part of a month the return is late, up to 25%. IRS: Failure to file penalty
- Paying late. Generally 0.5% of the unpaid tax for each month or part of a month it stays unpaid. Also capped at 25%. IRS: Failure to pay penalty
Other penalties can come off too. Accuracy-related, failure to deposit and information return penalties are all on the IRS’s list. IRS: Penalty relief
The three ways the IRS removes a penalty
There are three. Which ones you can use depends on the penalty. IRS: Penalty relief
1. Your record has been clean
This one is called First Time Abate. It is the IRS’s most common waiver. It looks at your track record, not your reasons.
It covers the penalties for filing late, paying late and failing to deposit.
To qualify, you generally need:
- The same type of return filed on time for the past three years, or 12 quarters in a row
- No penalties in those years, apart from an estimated tax penalty. A penalty that was later removed for reasonable cause or IRS error does not count against you
Businesses have to meet extra conditions. And it does not cover everything. It will not apply to a return you file only once or now and then, to the Daily Delinquency Penalty, or to information reporting that depends on another filing. IRS: Administrative penalty relief
Whether your three years qualify is not a guess. It is there in your transcripts. We can read them and tell you in one sitting.
You do have to ask. Nothing comes off on its own.
The asking is simple, at least. You do not have to name First Time Abate. You do not have to send documents. The IRS looks at your account and checks. IRS: Administrative penalty relief
If you would rather we made that request for you, we can.
This change is already under way. The IRS is moving from First Time Abate to something called an Automatic Exemption from Penalty. It began in summer 2026. It applies to eligible original returns from the 2025 tax year onward, and to 2026 quarterly returns onward.
The eligible return series are Forms 1040, 1065 and 1120, employment tax Forms 940, 941, 943, 944 and 945, and Form CT-1. The same exclusions apply.
Here is what changes. If you file or pay late but meet that same three-year history, the penalty is not charged at all. The IRS sends you a letter saying so, and you do not need to reply to it. First Time Abate still covers earlier years. It also still covers any 2025 returns, and any 2026 quarterly returns, that the automatic relief does not look at.
If a notice shows a penalty you think should have been covered, the IRS asks you to get in touch. IRS: Administrative penalty relief
That is a call we can make for you. Send us the notice and we will take it up with the IRS.
2. Something got in the way
If your record does not qualify, the question becomes why you missed the deadline.
The IRS may remove the penalty if you can show two things. That you took ordinary care. And that you still could not file or pay on time. It decides one case at a time, on all the facts. IRS: Penalty relief for reasonable cause
There is no checklist. That is what makes this one hard to do on your own. Writing these requests is routine work for us, so we know what a strong one looks like.
The IRS gives examples of reasons that may count:
- Fire, a natural disaster or civil disturbance
- You could not get your records
- Death, serious illness, or an unavoidable absence, for you or someone in your immediate family
- A system problem that held up an electronic filing or payment
It is just as clear about what usually does not count on its own. Relying on a tax professional. Not knowing the rules. Mistakes and oversights. Not having the money.
Some of those can still help if other facts show you tried. And reasonable cause does not apply to every penalty. The estimated tax penalty is one it does not cover. IRS: Penalty relief for reasonable cause
A request like this is only as good as the story behind it. The IRS wants to know what happened, and when. How it stopped you filing or paying. And what you did to try.
It also wants proof. Hospital or court records with start and end dates. Disaster paperwork. Copies of the letters and receipts that back you up. IRS: Penalty relief for reasonable cause
Pulling all that together is the slow part. You send us what you have. We tell you what is missing, line it up against the dates, and write the explanation.
3. The law itself covers you
A few situations are written into the tax law.
The common ones are:
- You asked the IRS a question in writing, the answer it sent you was wrong, and you relied on it
- You mailed your return on time
- You live in a federal disaster area
- You were on military operations in a combat zone
Each one has its own conditions. Take the wrong-advice route. You qualify only if you asked the IRS in writing, and the answer it sent back was wrong.
To request that relief, the IRS wants three things:
- A copy of the advice it sent you
- An explanation of how you relied on it
- A copy of the notice showing the penalty that resulted
IRS: Penalty relief due to statutory exception
These turn on small details that are easy to miss. We go through them against your file.
What about the interest?
This is where people are most often surprised, so we say it up front.
The IRS charges interest on unpaid tax, and on penalties, until the balance is paid off. IRS: Interest
If a penalty is reduced or removed, the interest on that penalty goes with it, automatically. IRS: Penalty relief
Beyond that, interest stays. Reasonable cause will not remove it. First Time Abate will not remove it. The one exception is interest caused by an unreasonable error or delay by an IRS employee, and that is a separate request. IRS: Interest
We would rather tell you that on day one than let you count on money that is not coming back.
How to ask
Start with the instructions on your notice.
Some requests can be handled on the phone, using the toll-free number on the notice. Have three things in front of you. The notice. The exact penalty you want removed. Your reasons. The IRS will often tell you on the call whether it is approved.
If it cannot be settled by phone, you can ask in writing on Form 843, Claim for Refund and Request for Abatement. IRS: Penalty relief
You do not have to make that call yourself. Most people would rather not. With your authorization, we deal with the IRS for you.
One useful thing to know. If you call about reasonable cause and the IRS sees that you qualify for first-time relief instead, it will apply the first-time relief. IRS: Penalty relief for reasonable cause
If the IRS says no
A no is not always the end.
Say you asked in writing to remove a late filing or late payment penalty, and the IRS turned you down. If the denial letter gives you appeal rights, you may be able to take it to the IRS Independent Office of Appeals.
You generally get 30 days from the date on the rejection letter. The letter states the deadline that applies to you. IRS: Penalty appeal
Thirty days is enough, if someone starts on it the day the letter lands. Send it to us when it arrives and we will handle the appeal.
While you are still paying
Relief looks backwards. The balance in front of you can still be growing.
If you cannot pay in full, the IRS suggests paying what you can and applying for a payment plan. If you are an individual who filed on time, the late payment penalty drops to 0.25% a month while an approved payment plan is in place. Interest keeps running on whatever is left. IRS: Failure to pay penalty IRS: Interest
Which of these is the right move while you pay down a balance is the sort of thing a first conversation sorts out.
Not sure which penalties you have, or which years they sit on? Your IRS online account, your account transcripts and your notices are where to look. How do I find out exactly what the IRS has on me?
Reading those for people is usually where we start. It does not commit you to anything.
Talk it through with IRS Help
Whether a penalty can come off depends on the penalty, your history, and what actually happened.
Working that out on your own means hours of reading and a stack of paperwork. Working it out with us takes a conversation.
Book a free 30-minute consultation with IRS Help. Bring the notices you have, even the ones you have not opened. No pressure, no judgment.
You can also read about IRS Help’s tax resolution services, including penalty abatement.
General information about federal IRS penalties and relief. State tax agencies have their own penalty rules, and whether relief is available in a particular case depends on the facts.
Schedule your free consultation