What the waiver covers
First time abatement is an IRS administrative policy rather than a statute, and it applies to a limited group of penalties: generally failure to file, failure to pay, and failure to deposit employment taxes. It does not cover accuracy-related penalties, fraud penalties, or the penalty for underpaying estimated tax. The IRS looks at your recent record for the same type of return, which generally means no significant penalties in the prior few years, along with being current on required filings and having paid the tax or set up a payment arrangement. You do not need to explain why the penalty happened, which is what sets this waiver apart from a reasonable cause request.
How the request is made
Many taxpayers ask by calling the number on the notice, and the IRS can often grant first time abatement over the phone. You can also respond in writing or use the IRS form for requesting abatement. If the tax for that year is still unpaid, the failure-to-pay penalty keeps growing, and relief granted now may reach only the amount charged so far, so a follow-up request can be needed once the balance is paid. When a penalty is removed, the interest charged on that penalty is generally reduced as well, but interest on the underlying tax usually stays. Keep a record of the date, the name of the person you spoke with, and any confirmation letter.
When to think before asking
Because the waiver depends on a clean record, using it now can affect eligibility for the next few years. If you have a strong reasonable cause argument, such as a serious illness or a disaster, it may be worth presenting that as well, though the IRS follows its own procedures in deciding which relief to apply. Penalties spread across several years usually cannot all be removed this way, since the policy is generally applied to a single tax period. Businesses with payroll deposit penalties have their own considerations. We review the notices, your filing history, and the facts behind the penalty to suggest which request to make and in what order.
