Penalty Relief: How to Ask the IRS to Remove a Penalty

Can the IRS remove a penalty?

Sometimes. The IRS says you may qualify for penalty relief if you tried to comply with tax laws but were unable due to circumstances beyond your control. Nothing is guaranteed. The IRS looks at each case.

Start with your notice. The IRS says to check that its information is correct. If it is not, follow the instructions on the notice. If you can resolve the issue, a penalty may not apply. Our guide on what to do with an IRS notice covers those first steps.

What kinds of penalty relief exist in 2026?

There are three paths. The table shows them in plain terms.

The IRS announced in a July 8, 2026 news release that AEP will replace First Time Abate. AEP applies to eligible original returns beginning with tax year 2025 and 2026 quarterly returns. To qualify, you need a history of filing on time and paying any tax due in the three prior years, or 12 consecutive quarters for quarterly returns.

The IRS says taxpayers do not need to take action to receive AEP. Not every return is eligible. During the transition, some qualifying taxpayers may still get penalty notices for tax year 2025 returns. The IRS says those who believe they qualify may contact it to request First Time Abate.

What does First Time Abate need?

You need three years of timely compliance. The IRS says you must contact it to ask for FTA, but you do not need to name FTA or send supporting documents. The IRS reviews your account to see if you qualify. It tells you to call the toll-free number on your notice, or send a written statement or Form 843.

Business taxpayers have added tests. For example, the IRS says it must not have waived the failure to deposit penalty four or more times in the prior three years. Because the program is changing, read the IRS page before you rely on this summary.

What counts as reasonable cause?

The IRS says reasonable cause is decided case by case, using all the facts and circumstances. For a late return or payment, you must show you used ordinary care and prudence and were still unable to comply. The IRS lists examples such as fires and natural disasters, inability to get records, and serious illness or death of the taxpayer or immediate family.

Some reasons are weak on their own. The IRS says lack of funds by itself is not reasonable cause for failing to pay. It also says you are generally responsible for your taxes even if someone else handles them. Keep dates, notices and records of what you did once the problem ended.

How do I ask for relief?

Follow the instructions on your IRS notice. The IRS says some requests may be accepted over the phone, using the toll-free number on the notice. If it cannot approve relief by phone, you may request relief in writing with Form 843, Claim for Refund and Request for Abatement.

Have your notice, the tax period and the penalty type ready. The IRS says it charges interest on penalties, and that it will reduce or remove related interest if a penalty is reduced or removed.

You can authorize someone to contact the IRS for you. See our entries on penalty abatement and Form 2848. If the amount due is large, the installment agreement entry explains one way to pay over time.

Next step

Wallace CPA works with clients on IRS problems and notices. Call (877) 682-1171 or use the form at /contact before you answer a penalty notice.

This post is general information, not advice for your situation. Talk to a CPA about your own situation. No one can promise the IRS will remove a penalty.