Penalty Abatement Relief

What is Penalty Abatement Relief?

Penalty Abatement relieves you from facing penalties for failing to file tax returns or making payments on time as an individual, or failing to deposit certain taxes as a business. If you have complied with law but are unable to meet the tax obligations due to circumstances beyond your control, the IRS offers you the ability to have your penalties waived. There are three types of penalty relief that the IRS offers:

Reasonable Cause

First Time Penalty Abatement

Statutory Exception

What is Reasonable Cause?

Reasonable Cause, as defined by the IRS, is based on all facts and circumstances in your situation. It must be established that you followed all procedures to meet your tax obligations but due to certain circumstances, were unable to meet them. The IRS notes that financial hardship does not make you eligible for the reasonable cause waiver but the circumstances that led to the hardship may make you eligible.


Eligible causes include:


Natural Disaster

Inability to obtain records


Serious Illness

Unavoidable absence of taxpayer or immediate family

What is First Time Penalty Abatement (FTA)?

This type of penalty relief is meant to reward those who typically meet their tax requirements. It is available to you if you typically follow tax procedures and obligations but for the first time, could not meet your tax obligation on a single return. You must not have received a penalty on the specific type of return within the past three years in order to be eligible for this waiver.

You Are Eligible for FTA if:

What is a Statutory Exception?

A statutory exception is for those who have asked for advice from the IRS and received incorrect information. If you have received a penalty due to misleading information from the IRS, the IRS will request certain information in order to deem you eligible for this type of waiver.

The IRS requires these elements for you to be eligible for this type of relief:

What About the Interest Caused By the Penalties?

If the IRS finds you eligible for any of these waivers, the interest charged because of the penalties will be reduced or removed by the IRS.

Next Steps:

If you find yourself in danger of penalties from the IRS, you may be eligible for one of these penalty relief options from the IRS. It is best to speak with a tax professional about your options and what the best form of penalty relief would be for you. Give us a call today and we can help you decide which type of penalty relief best suits your situation. Visit our IRS problem resolution services page for more information.

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