What is The IRS First-Time Penalty Abatement: How Does It Works?

If you owe any amount of money to the IRS, I'm pretty certain there would be penalties included in the tax-due amount. These penalties can add up, sometimes even doubling the amount due.

In this blog post, I'm going to share a little-known secret to getting those penalties abated with a simple phone call. It's called a first-time penalty abatement.

It's not a widely known program, but I'm going to give you the inside scoop on how to do it, which can
save you thousands of dollars. But before we jump in, it's important to understand that not everyone may qualify for penalty relief or abatement, as they call it.

Navigating the IRS can be tricky, and that's where the expertise of a tax professional can be invaluable. But don't let that deter you. Knowledge is power and today, I'm here to arm you with just that.

So the IRS imposes penalties for a variety of reasons, like late filing, late payment, and also inaccurate tax returns. These penalties, coupled with interest, can quickly snowball into a very large amount, too.

But here's where it gets interesting.

The IRS isn't as unforgiving as you might think. Under certain conditions, they're willing to waive these penalties.

That's right.

Enter the First Time Penalty Abatement Program.

What is The IRS First-Time Penalty Abatement?

First-time Penalty Abatement (FTA) is a provision by the IRS that allows eligible taxpayers to request the removal of certain penalties associated with their tax obligations. This includes penalties for failure to file tax returns, failure to pay taxes on time, and failure to deposit certain taxes as required. If approved, the IRS may waive the penalties, providing relief to qualifying taxpayers.

This little-known provision is like a golden ticket for taxpayers who've been generally good about filing and paying their taxes but maybe messed up one year.

So How Does Penalty Abatement Work?

It's simpler than you might think.

If you've kept up with your tax filings for the past three years and haven't faced any penalties during that time, and you're all caught up on your taxes or have an installment agreement in place, you might just be eligible.

This abatement applies to failure to file and failure to pay penalties, but it won't cover accuracy-related penalties.

How to Request First-Time Penalty Abatement?

So requesting first-time penalty abatement is pretty straightforward. You can either pick up the phone and make a call to the IRS or make your request in writing.

I prefer calling since you can get immediate results. You can use the number on any of the IRS notices you might have received, or you can dial the IRS Penalty Hotline directly.

IRS First-Time Penalty Abatement Hotline and Phone Number

The number for the IRS Penalty Hotline is 855-223-4017, extension 225. And you can also call their main phone number at 1-800-829-1040. Their hours are 07:00 AM to 07:00 PM.

When you get them on the phone, you'll need to verify who you are, tell them what you're calling about, and then very politely ask for the first-time abatement to remove the penalties.

They'll look it up on their systems and probably put you on hold. And if you qualify, they'll erase the penalties right then and there. You'll also get a letter in the mail confirming the penalty abatement.

That's it.

Seriously, this is such good, helpful information. You may share this blog post so more people can find out about it.

Erin Collins over at the Tax Advocate Service, said in a recent webinar that more people ought to know about this useful program. So that's why I decided to make this video.

What to Do if You Don't Qualify For The FTA?

Now, if you don't qualify for some reason, you still have the option to get the penalty waived. If you can show that you had what's called reasonable cause. It's a broad list of reasons, and the IRS has guidelines on what they'll accept as reasonable cause.

I'm not going to get into that here. I did make a YouTube video going over that, which you can check out here.

Navigating tax issues can be complex, so don't ever hesitate to seek professional advice. But first-time abatement is something you can do on your own and save potentially thousands of dollars.

Real quick, do know that I have a free Facebook group where you can connect with CPAs like myself, tax professionals, and regular people wanting to learn more about taxes.

As always, thanks for reading, and see you in another blog post!