--- title: "Penalty Relief: How to Ask the IRS to Remove a Penalty" description: "How IRS penalty relief works in 2026: the new Automatic Exemption from Penalty, First Time Abate, reasonable cause, and how to ask." url: https://wallacecpa.multisites.ai/blog/irs-penalty-relief publisher: Wallace CPA phone: +1-877-682-1171 quote: https://wallacecpa.multisites.ai/contact --- # Penalty Relief: How to Ask the IRS to Remove a Penalty You may qualify for IRS penalty relief if you tried to comply with tax laws but could not because of circumstances beyond your control. In 2026 the IRS is moving First Time Abate to an Automatic Exemption from Penalty for taxpayers with three years of timely compliance. IRS noticesPublished October 5, 20263 min read ## 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](https://wallacecpa.multisites.ai/guides/irs-notice-what-to-do) covers those first steps. ## What kinds of penalty relief exist in 2026? There are three paths. The table shows them in plain terms. Type In plain terms IRS page Automatic Exemption from Penalty (AEP) Applies by itself when you filed or paid late but have three years of timely history Administrative penalty relief First Time Abate (FTA) Waiver you request, for taxpayers with three years of timely compliance Administrative penalty relief Reasonable cause You used ordinary care and still could not comply Penalty relief for reasonable cause 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](https://wallacecpa.multisites.ai/glossary/penalty-abatement) and [Form 2848](https://wallacecpa.multisites.ai/glossary/form-2848-power-of-attorney). If the amount due is large, the [installment agreement](https://wallacecpa.multisites.ai/glossary/installment-agreement) entry explains one way to pay over time. ## Next step Wallace CPA works with clients on [IRS problems and notices](https://wallacecpa.multisites.ai/services/irs-problems). Call (877) 682-1171 or use the form at [/contact](https://wallacecpa.multisites.ai/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. ## Frequently asked questions ### What is First Time Abate? The IRS calls it the most common administrative penalty waiver. It applies to taxpayers with three years of timely compliance history. The IRS says it is transitioning to a new relief called Automatic Exemption from Penalty, starting summer 2026. ### Does the IRS remove interest when it removes a penalty? The IRS says it will automatically reduce or remove the related interest if a penalty is reduced or removed. Interest on a penalty you still owe keeps growing until you pay. ### Is lack of money a reasonable cause? The IRS says lack of funds by itself is not reasonable cause for failing to pay. Other facts may still support relief, so a CPA can review them with you. ## Terms on this page - [Installment agreement](https://wallacecpa.multisites.ai/glossary/installment-agreement) - [Penalty abatement](https://wallacecpa.multisites.ai/glossary/penalty-abatement) ## Sources 1. [IRS: Penalty relief](https://www.irs.gov/payments/penalty-relief) 2. [IRS: Administrative penalty relief](https://www.irs.gov/payments/administrative-penalty-relief) 3. [IRS news release IR-2026-83](https://www.irs.gov/newsroom/irs-simplifies-penalty-relief-introduces-automatic-process-for-eligible-taxpayers) 4. [IRS: Penalty relief for reasonable cause](https://www.irs.gov/payments/penalty-relief-for-reasonable-cause) Written by Wallace CPA and checked against the sources above on October 5, 2026. Tax rules and dates change, so check the linked page before you act. General information, not advice for your situation. ## Keep reading - [Got an IRS notice? How to read it and what to do firstRead the whole notice, find its CP or LTR number, and note the reply date. A CP2000 is a proposal to change your return, not a bill.](https://wallacecpa.multisites.ai/guides/irs-notice-what-to-do) - [How long to keep tax records, and which onesThe IRS says to keep records that support your tax return until the period of limitations runs out. For most returns that is 3 years.](https://wallacecpa.multisites.ai/guides/how-long-to-keep-tax-records) - [IRS payment plans and offers in compromise: what each one isAn IRS payment plan lets you pay a tax bill over time. An offer in compromise asks the IRS to accept less than the full amount. The IRS decides each case.](https://wallacecpa.multisites.ai/guides/irs-payment-plans-and-offers-in-compromise) - [How to protest your property tax value in Tarrant and Denton countiesIn Tarrant and Denton counties, you protest your property value with your county appraisal district.](https://wallacecpa.multisites.ai/guides/property-tax-protest-tarrant-denton) - [S corporation, LLC or sole proprietor: how the choices differ in TexasA sole proprietor reports business income on Schedule C of the personal return. An LLC is a legal structure, and its federal tax treatment depends on what it...](https://wallacecpa.multisites.ai/guides/s-corp-llc-sole-proprietor-texas) - [Small business bookkeeping setup and a monthly routineStart with a separate business bank account, a simple chart of accounts and one place for receipts.](https://wallacecpa.multisites.ai/guides/small-business-bookkeeping-routine) ## Talk to Wallace CPA Call the Southlake office and say what you need: a return, an IRS letter, your books or a new business. Have the notice or last year's return nearby if you have one. [Call (877) 682-1171](tel:+1-877-682-1171)[Send a message](https://wallacecpa.multisites.ai/contact) 180 State Street, Suite 225, Southlake, TX 76092