Penalty Abatement: How to Remove IRS Penalties
Penalties can be a large share of a tax bill. First-time abatement and reasonable-cause abatement can remove them — here's how each works.
Quick Answer
IRS penalty abatement removes penalties through two paths: first-time abatement for taxpayers with a clean three-year compliance history, and reasonable-cause abatement for penalties caused by a specific hardship like illness, disaster, or death in the family. Removing penalties can cut a tax balance significantly before any payment plan is set up.
Why penalties matter
Penalties can be 25–50% or more of a tax debt. The failure-to-file penalty alone can reach 25% of the tax, and the failure-to-pay penalty another 25%. Removing penalties before negotiating a payment plan reduces both the balance and the interest that compounds on it. Understanding how you ended up owing the IRS often reveals which penalty abatement path applies.
First-time penalty abatement
If you have a clean compliance history — filed all required returns, paid or arranged to pay all tax due, and no penalties (other than estimated tax penalties) in the prior three years — the IRS will generally remove a first-time failure-to-file or failure-to-pay penalty on request.
This is a one-time administrative waiver. You request it by phone, in writing, or with Form 843. It's the fastest penalty relief available and applies even if the penalty was your fault.
Reasonable-cause abatement
If you don't qualify for first-time abatement, you can request reasonable-cause abatement for penalties caused by circumstances beyond your control: serious illness, hospitalization, death in the family, natural disaster, fire, casualty, or inability to obtain records.
Reasonable cause requires a written explanation and supporting documentation. The IRS evaluates whether a reasonable person in your situation would have complied despite the circumstance.
What abatement does not remove
Penalty abatement removes penalties, not the underlying tax or interest. After penalties are removed, interest is recalculated on the reduced balance. Some penalties, like the estimated tax penalty, have their own separate abatement criteria.
How to request abatement
First-time abatement is often granted with a phone call to the number on the notice. Reasonable-cause abatement is filed with Form 843 and a written statement. If the IRS denies the request, you can appeal. A tax professional can help frame the reasonable-cause argument and gather documentation.
Frequently Asked Questions
Answers to the questions taxpayers ask most about this topic.
Can IRS penalties be removed?
Yes. The IRS removes penalties through first-time abatement (for taxpayers with a clean three-year compliance history) and reasonable-cause abatement (for penalties caused by illness, disaster, death in the family, or other circumstances beyond your control). Removing penalties does not remove the underlying tax or interest.
What is first-time penalty abatement?
First-time abatement is an administrative waiver that removes a first failure-to-file or failure-to-pay penalty for a taxpayer who has filed all required returns, paid or arranged to pay all tax due, and had no penalties in the prior three years. It's often granted with a phone call.
How do I write a reasonable cause letter to the IRS?
State the specific circumstance (illness, disaster, death), when it occurred, how it prevented you from filing or paying on time, and attach supporting documentation (medical records, insurance claim, death certificate). File it with Form 843. The IRS evaluates whether a reasonable person would have complied despite the circumstance.