First-time penalty abatement is an IRS administrative waiver for taxpayers who have a clean record and then slip once. If you filed on time, or had no penalties, for the previous three years, the IRS can remove certain penalties for the current year without requiring a specific excuse. The IRS has also announced a new automatic version for newer years. This page explains who qualifies, what it covers, what it does not, and how to ask.
Penalties it covers
| Penalty | Code section |
|---|---|
| Failure to file (individual and business returns) | 6651(a)(1) |
| Failure to file for partnerships | 6698(a)(1) |
| Failure to file for S corporations | 6699(a)(1) |
| Failure to pay | 6651(a)(2) and 6651(a)(3) |
| Failure to deposit | 6656 |
These apply regardless of the penalty amount. The IRS treats FTA as applying to one tax period, and it is not tied to a specific penalty. Read more on the failure-to-file, failure-to-pay and failure-to-deposit pages.
Who qualifies
The IRS describes a three-year timely compliance history:
- The same type of return as the one with the penalty was timely filed for each of the prior three years (or 12 consecutive quarters for quarterly filers).
- Either no penalty was assessed for those periods (the estimated tax penalty does not count), or a penalty was assessed and later removed for reasonable cause or because of an IRS error.
- For businesses, the failure-to-deposit penalty must not have been waived four or more times in the prior three years, and the penalty must not have been charged for avoiding the electronic payment system.
FTA does not apply to returns filed once or infrequently, which the IRS calls event-based filing requirements. It also does not apply to the daily delinquency penalty or to information reporting that depends on another filing.
Example (hypothetical). You filed and paid your individual return on time for 2022, 2023 and 2024, with no penalties. For 2025 you filed two months late and owed $5,000. A failure-to-file penalty and a failure-to-pay penalty are assessed. If you call and ask for relief, the IRS looks at your account, sees the clean three-year history, and can remove both penalties. You still owe the tax and the interest on it.
If you have not paid the tax in full, the penalty for failing to pay can keep growing. IRS procedures say the penalty accrued so far can be removed under the waiver, and any additional failure-to-pay penalty can be removed after the tax is paid in full. Pay as soon as you can.
The new Automatic Exemption from Penalty
The IRS says AEP begins in summer 2026 and applies to 2025 tax year returns and later, and to 2026 quarterly returns and later. The eligible return series are Forms 1040, 1065 and 1120, Forms 940, 941, 943, 944 and 945, and Form CT-1. It covers the same three penalties. If you file or pay late in the current year but filed and paid on time for the prior three years (or 12 consecutive quarters for quarterly filers), no penalty is assessed. The relief is applied when your original return finishes processing, and the IRS sends a notice explaining it. You do not need to contact the IRS or respond.
| Feature | FTA | AEP |
|---|---|---|
| How relief is granted | You contact the IRS | Automatic |
| When the penalty arises | Assessed first, then removed | Not assessed |
| Failure-to-pay penalty on unpaid tax | May continue to accrue until the tax is paid | Does not accrue or get assessed on the unpaid tax |
| Applies to | Eligible 2025 returns and 2026 quarterly returns that AEP did not consider, plus all earlier years and periods | 2025 tax year and 2026 quarterly returns and all later years |
You remain liable for unpaid tax, interest and any penalties AEP does not cover. If you receive a penalty notice and think you qualified, contact the IRS. The Form 1120-S is not named in the IRS's list of eligible returns, so an S corporation should expect to ask for first-time abatement for its late-filing penalty. See the S corporation and partnership late-filing penalty page.
How to request FTA
You can call the number on your notice or letter, or send a written statement or Form 843, Claim for Refund and Request for Abatement, to the address in the Form 843 instructions. You do not have to say "first-time abatement." If you ask for reasonable cause and the IRS finds you qualify for FTA during the call, it will apply FTA. The IRS says it applies FTA before reasonable cause and tells you the removal was based on your compliance history. Our guide on how to request penalty abatement has the steps.
Interest
Interest on a penalty is automatically reduced or removed when the penalty is reduced or removed. Interest on the tax itself continues. See IRS interest on unpaid taxes.
If you do not qualify
You may ask for reasonable cause relief, and the IRS notifies you of its decision. If it denies the request, the denial letter explains appeal rights.
How we can help
We can review your account transcripts to confirm the compliance history, tell you whether first-time abatement or the automatic exemption is likely to apply, and make the request for you with a power of attorney. We can also coordinate payment so the failure-to-pay penalty stops growing. We cannot promise the IRS will grant relief. Visit our IRS representation page, read about tax transcripts, or contact us.
Frequently asked questions
Can I use first-time abatement more than once?
The rule looks at your last three years. A penalty that was removed for reasonable cause or IRS error does not count against you, but an unreversed penalty does, and IRS procedures also exclude periods where a penalty was previously removed under first-time abatement. In practice that means it is a once-in-three-years tool.
Do I have to pay the tax first?
Not always. The IRS procedures describe abating the penalty while tax is unpaid, but the failure-to-pay penalty keeps accruing on unpaid tax until you pay.
What if I get a penalty notice after AEP began?
Call the number on the notice and ask whether AEP, FTA or reasonable cause applies to your account.
Official sources
- IRS: Administrative penalty relief
- IRS: Penalty relief due to First Time Abate or other administrative waiver
- IRS: Internal Revenue Manual 20.1.1, Introduction and penalty relief
- IRS: Penalty relief
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.