What Is The First-time Penalty Abatement?



If you’re like most taxpayers, you do your best not to run afoul of the IRS. After all, you don’t want to get saddled with penalties for late payment, late returns, or any other offenses, right? However, things happen: you miss a tax filing deadline, or send in your tax payment later than you’d like. The resulting tax penalties aren’t pretty, but you may have some recourse, especially if you haven’t had any prior penalties.

What Is The First-time Penalty Abatement?

The IRS established this penalty relief provision for first-time “offenders” who are otherwise in good standing. Under the First-time Penalty Abatement program, you could get your penalties reduced or eliminated.

While the IRS is strict about imposing penalties, they do offer a break to first-time offenders. If you’ve never incurred a tax penalty before, this program could be your means to a lighter penalty.

What’s the catch? You will need to meet certain guidelines.

Reasonable Cause: Suppose you were ill on tax day and didn’t file your return, or if you were dealing with other circumstances beyond your control. Your penalty abatement request would fall under the Reasonable Cause category.

IRS Error: You’ll need to provide supporting documentation for this claim, but if you can determine that the IRS made an error in calculating your tax liability, you could receive a penalty abatement or reduction.

Administrative Waiver: The majority of first-time penalty abatements fall into this category. If you have no prior penalties with the IRS, and this is your first time you’ve failed to follow IRS regulations, the IRS may be willing to grant you a penalty abatement.

If you’ve run into a tax penalty due to minor oversight or circumstances beyond your control, you may be eligible for the First-time Penalty Abatement program. You have the option of requesting the abatement on your own or consulting with a tax professional if you prefer.


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