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You may qualify for penalty relief if you were unable to comply with tax laws due to circumstances out of your control or if you have a clean compliance record. But getting relief requires knowing how to apply, providing compelling narratives to the IRS, and leveraging the tax code to your advantage, and that's where we come in. The team at Tax Network USA is ready to help you with penalty abatement.
There are two types of penalty abatement: first-time penalty abatement for taxpayers with a clean compliance history and reasonable cause abatement for taxpayers who fail to file due to circumstances beyond their control.
Although the IRS replaced FTA with AEP (Automatic Exemption Penalty) at the beginning of summer 2026, taxpayers still have to apply for a reasonable cause abatement to obtain relief for past years.
Tax Network USA prepares and submits penalty abatements for individual taxpayers and business owners nationwide. Our enrolled agents, CPAs, and tax attorneys evaluate each case and identify the option that maximizes the relief available based on your circumstances.
Penalties may be reduced or eliminated entirely depending on your situation. If you think you might be eligible for penalty relief, reach out to us to get help with IRS penalty abatement. See how much we can help you save.
Penalty abatement requests are appropriate in a wide selection of situations. At Tax Network USA, we work with:
There are many types of penalties, but not all of them qualify for penalty relief. Here are some penalties that can be eliminated by penalty abatement with their current rates:
The failure-to-file penalty applies when you don't file your tax return by the due date (April 15 or the next business day for income tax returns). The penalty is 5% of the tax due for each month or partial month the return is late, and it can accrue up to 25% of the unpaid tax.
If both a failure-to-pay penalty and a failure-to-file penalty are applied in the same month, the IRS applies a 4.5% failure-to-file penalty because it's reduced by the failure-to-pay penalty applied in the month.
Worried about this penalty and want help with unfiled returns along with penalty abatement services? Tax Network USA provides comprehensive support for all your tax problems.
The failure to pay a penalty applies when you fail to pay the tax you owe by the due date. The penalty is 0.5% of the unpaid taxes for each month or part of the month that the tax remains unpaid. It accrues up to 25% of your unpaid taxes.
This penalty applies when you don't pay employment taxes on time or you pay less than owed. It ranges from 2% to 15%, depending on how late the final deposit was. For example, if you file 3 days late, you're charged a penalty of 2%, and if you're 11 days late, your penalty increases to 15% of the total deposit.
The accuracy-related penalty applies when you don't claim all your income or claim credits and deductions you don't qualify for to lower your tax bill. The penalty is 20% of the portion of the underpayment attributable to negligence or disregard of rules and regulations.
It's typically applied during an audit. Protect yourself with our audit representation services.
The two main types of penalty abatement are first-time abatement and reasonable-cause abatement. Which one you should apply for depends on your compliance status and reason for seeking abatement. We'll help you figure out the best approach, but here's an overview to help you understand the options.
First-time abatement (FTA) is an administrative waiver granted by the IRS to taxpayers with a clean compliance history. To qualify for FTA on personal income tax returns and payments, you must have:
For employers, you qualify if:
FTA is one of the most underutilized tax relief methods, even though it can significantly reduce a tax bill by eliminating penalties.
To get help, all you need to do is call us. Need help staying on top of business finances so you don't incur penalties on business returns? That starts with great bookkeeping services and timely tax prep, which we also provide.
If you can prove that your failure to file, pay, or deposit taxes was due to circumstances outside of your control, you may be eligible for a reasonable cause abatement. There is no automatic qualification criteria for this abatement; the IRS reviews each case individually based on the cause.
Some of the circumstances that may qualify as reasonable cause include:
In the above scenarios, you may be eligible for reasonable cause abatement. However, not having the money to pay, forgetting to file or pay, or relying on a third party who failed to act are not qualifying circumstances.
Working with a tax professional can improve your odds of having a reasonable cause abatement approved. For starters, your written argument is the most important part of a reasonable cause abatement request. The IRS declines poorly written submissions, even when the actual circumstances could mean that you qualify.
Be careful about taking a DIY approach. The wrong strategy, failure to reference the right part of the tax code, or applying after the deadline can all cause you to owe more than you should. Also, if the IRS rejects your request, you only have one chance to appeal. Our resolution services are designed to help you avoid these risks.
Here's what to expect if you choose to work with us:
After the initial consultation, we review your tax situation, including the penalties assessed, the tax years involved, and your compliance history.
Based on the information we gather, we decide which abatement will provide the best outcome. It could be the first time abatement (FTA), reasonable cause abatement, or a combination of both.
Our team prepares the written abatement request or Form 843 submission. We handle the entire process, including documenting the circumstances and citing the relevant IRS guidelines and case law when it's relevant to support your case.
Next, we submit the request and manage IRS communication throughout the review process. If any follow-up is needed, we will handle it on your behalf to ensure you receive the most favorable outcome.
In cases when the IRS denies the initial request, you're not out of options. We can guide you on filing an appeal through the IRS Independent Office of Appeals.
You can appeal the IRS's decision to deny your penalty abatement application. You have a legal right to appeal a penalty abatement denial through the IRS Office of Appeals, which conducts a fresh review with an independent officer who wasn't involved in the original decision. Keep in mind that you only have 30 days from the date of the rejection letter to file your appeal request.
At Tax Network USA, we help taxpayers navigate the appeal process and build a stronger argument based on the IRS's rejection reason. Whether you requested penalty abatement on your own or with a tax professional, it's time to get our help if the request was rejected.
State tax agencies assess their own penalties for late filing and late payments, with separate rules and qualification standards from the IRS.
For example, the California Franchise Tax Board has a one-time penalty abatement for individual taxpayers. It's a once-in-a-lifetime abatement and is eligible only for taxable years on or after January 1, 2022. To be eligible, you've got to be compliant with all tax return filing requirements, not previously granted the abatement, and have all outstanding liabilities paid or be current with installment agreement payments.
Tax Network USA handles both federal IRS penalty abatements and state-level requests, including CA FTB cases, as part of the same resolution process.
If you also need help resolving your back taxes, our team will help you explore resolution options in addition to penalty abatement. The main IRS programs include:
Tax problems due to your spouse? Then, you may need our help with innocent spouse relief. Setting up a resolution on your tax debt can protect you from tax liens, and it stops the IRS from moving forward with revenue officer assignment, bank levies, wage garnishments, or asset seizures.
At Tax Network USA, we never use a one-size-fits-all approach. We evaluate your tax situation, including your compliance history, and identify which abatement you're eligible for before taking any action. We leverage every aspect of the tax code, from the Fresh Start Initiative to new penalty abatement rules, to get you the best results possible.
Since the written argument for reasonable cause is the most important factor in approval, we prepare each one with care and all the supporting evidence we can find. Our team of enrolled agents, CPAs, and tax attorneys has years of experience with IRS penalty abatement applications, so we understand what works and what doesn't.
We also have specialized experience with emerging aspects of the tax code, like cryptocurrency reporting. So, regardless of what led to the penalties, we're here to understand the situation and help you find relief.
Ready to file for an IRS penalty abatement? Contact us for a free consultation.
Here are answers to common questions on IRS penalty abatement:
First-time abatement (FTA) is an administrative waiver for taxpayers who have a clean compliance history. It is the simplest and fastest penalty abatement program the IRS offers, and it doesn't require an explanation for the failure.
Reasonable cause abatement, on the other hand, requires you to submit a documented argument proving that the failure was due to circumstances out of your control. The written argument is crucial in determining whether this type of abatement request is approved.
Yes. You don't need to have paid the underlying back taxes before you can request a penalty abatement. However, if you are requesting an FTA, you will need to be up to date on any filing requirements and have a payment plan or arrangement already in place.
The answer depends on the type of penalty abatement you are requesting and how you request it. If you make a simple FTA request by phone, it may be resolved by the end of the call. However, written requests and Form 843 submissions can take several weeks to be approved.
If the IRS denies your initial request, you have the right to appeal that decision. However, the appeals process can take several months from start to finish. The time it takes depends on the complexity of the case and the IRS's workload.
Yes, but only the interest that accrued on the penalty that's abated, not interest on the principal tax debt. For example, if you had a tax debt that had accrued a penalty of $1000, and this penalty had incurred an interest of $100, the $100 would be eliminated with the penalty. However, any interest that compounded on the principal amount would remain. The IRS can also abate interest if it is due to IRS delays or errors.
You can appeal the decision through the IRS Independent Office of Appeals. Review the notice explaining why your request was denied and determine whether the documentation was sufficient to support it. If you still feel like you've got a reasonable cause, submit a stronger cause statement and include more supporting documents.
Tax Network USA reviews every penalty situation independently to identify the maximum relief available. Our enrolled agents, CPAs, and tax attorneys evaluate your first-time abatement (FTA) and reasonable cause abatement eligibility before offering any solutions.
Contact our team today for a free, confidential consultation.
