Can the IRS remove penalties?

Yes. The IRS may remove or reduce certain penalties if you qualify for administrative relief, reasonable cause relief, statutory relief, or if the IRS made an error.

What is First Time Penalty Abatement?

First Time Penalty Abatement is an IRS administrative relief option for taxpayers with a history of timely compliance. It may apply to certain failure-to-file, failure-to-pay, and failure-to-deposit penalties.

What is Automatic Exemption from Penalty?

Automatic Exemption from Penalty (AEP) is a newer IRS process beginning in summer 2026 for eligible taxpayers and return types. If you qualify, certain penalties won't be assessed in the first place, with no request needed.

What is reasonable cause penalty relief?

Reasonable cause relief may apply when you tried to comply with the tax law but couldn't because of circumstances beyond your control. The IRS reviews your facts, timeline, and supporting documents.

Can IRS interest be removed too?

If a penalty is removed or reduced, the interest charged on that penalty is often reduced as well. Interest on the underlying tax is usually harder to remove.

Do I need to be current on my filings before requesting penalty abatement?

Often, yes. The IRS may look at whether required returns have been filed and whether you've corrected the underlying issue. The right timing depends on your specific facts.

Can I request penalty abatement after setting up a payment plan?

Yes. Penalty abatement may still be available after you've set up a payment plan, and it can also help slow how quickly future penalties add up.

Should I call the IRS or send a written request?

Simple cases can sometimes be handled by phone. Cases involving reasonable cause, multiple years, large penalties, or unusual facts are usually stronger as a written request with documentation.

IRS Penalty Abatement Help

IRS penalties can add thousands of dollars to an already stressful tax balance. In some cases, the IRS may reduce or remove penalties through penalty abatement, administrative relief, reasonable cause, statutory exceptions, or correction of an IRS error.

EA Tax Resolutions helps taxpayers review IRS penalties, determine which relief options may apply, and prepare a penalty abatement request based on the facts, documents, and IRS account history.

Can IRS Penalties Be Removed?

Yes, some IRS penalties may be removed or reduced. Penalty abatement is not automatic in every case. The IRS generally looks at the type of penalty, your filing and payment history, the reason the issue occurred, and whether you have supporting documentation.

Common penalties that may qualify for relief include:

Failure-to-file penalties
Failure-to-pay penalties
Failure-to-deposit penalties
Certain information return penalties
Certain accuracy-related penalties
Certain estimated tax penalties

The right approach depends on the facts. Some taxpayers may qualify for administrative relief. Others may need a reasonable cause argument supported by documents.

First-Time Penalty Abatement and the New Automatic Exemption From Penalty

The IRS has long offered an administrative relief option, commonly called First Time Abate, for taxpayers with a clean recent compliance history.

Starting summer 2026, the IRS is phasing in a new process called Automatic Exemption from Penalty (AEP) for eligible returns. Under AEP, if you file or pay late but have timely filed and paid for the prior three years (or 12 consecutive quarters for quarterly filers), certain penalties may not be assessed in the first place, with no request or Form 843 required. AEP applies beginning with 2025 tax year returns and later periods.

Even with these rules, it’s still worth a professional review. You may have multiple years involved, may not meet the automatic criteria, or may need a reasonable cause request instead.

Reasonable Cause Penalty Relief

Reasonable cause penalty relief may apply when you tried to comply with the tax law but could not because of circumstances outside your control. Examples may include:

Serious illness or incapacity
Death or serious illness in the immediate family
Natural disaster or casualty
Fire, flood, or destruction of records
Inability to obtain necessary records
Reliance on incorrect written advice from the IRS
Other facts showing ordinary business care and prudence

Reasonable cause is fact-specific. The IRS generally wants to know what happened, when it happened, how it prevented timely filing or payment, what steps you took to comply, and what documents support your explanation.

Penalty Abatement Is More Than a Phone Call

Some penalty relief requests can be handled by phone, but many cases require a written explanation and supporting documents. A weak request can be denied quickly if it doesn’t address the IRS standard or if the facts aren’t organized clearly.

A strong penalty abatement request should explain the specific penalty and tax period involved, what caused the filing, payment, or deposit issue, the timeline of events, why you couldn’t comply on time, what you did to correct the problem, why the failure wasn’t due to willful neglect, and what documents support the request.

In some cases, Form 843, Claim for Refund and Request for Abatement, is used to request penalty abatement or a refund of penalties already paid.

What Documents Help Support Penalty Abatement?

IRS notices or account transcripts
Medical records or doctor letters
Death certificates or funeral records
Insurance claims or disaster records
Police reports or court records
Prior correspondence with the IRS
Proof of attempted filing or payment
Bank records showing payment attempts

Can IRS Interest Be Removed?

Interest is different from penalties. When the IRS removes or reduces a penalty, the related interest charged on that penalty is often reduced too. Interest on the underlying tax itself is much harder to remove and generally requires a separate basis, such as an unreasonable IRS error or delay.

How EA Tax Resolutions Helps

EA Tax Resolutions is led by Anthony Fontana, E.A., CPA, a former California Franchise Tax Board auditor. We help taxpayers resolve IRS and California tax problems without scare tactics or cookie-cutter solutions.

Our process for a penalty abatement case may include:

Reviewing your IRS notices and account transcripts
Identifying penalties by year and type
Checking your prior compliance history
Determining whether First Time Abate, Automatic Exemption from Penalty, reasonable cause, or another relief option applies
Gathering supporting documents
Preparing and filing the penalty abatement request
Communicating with the IRS on your behalf
Reviewing the IRS decision and next steps with you

When Should You Request Penalty Abatement?

You filed a tax return late
You paid a tax balance late
Your business made late payroll tax deposits
You received large IRS penalties
You were dealing with illness, family hardship, or missing records
You recently became compliant
You are setting up a payment plan or considering an Offer in Compromise
You already paid penalties and want to check whether a refund claim is possible

Get Help With IRS Penalty Abatement

If IRS penalties have increased your tax balance, don’t assume the full amount is final. Schedule a free discovery call with EA Tax Resolutions, serving Huntington Beach, Orange County, and taxpayers nationwide, to review your IRS penalties and your options.