Have a clean record? You may qualify for penalty abatement.

Nobody enjoys receiving a penalty notice from the IRS – it feels overwhelming and scary. However, there’s good news for taxpayers who have made an honest mistake, especially those with a clean record. You may qualify for the IRS First-Time Abate (FTA) program, which offers relief to those who have fallen behind on their tax obligations.

What is the First-Time Abate program?

The FTA program is like a one-time waiver that can help you avoid penalties for specific violations. The initiative aims to help you navigate the complex tax system without the fear of getting penalized for a minor slip-up.

You can use the program to waive one of three types of penalties for a single tax period:

• Failure to file: For not submitting your tax return by the mid-April deadline or extension due date
• Failure to pay: For not paying your tax bill on time
• Failure to deposit: For employers who failed to turn in their employees’ withholding taxes

Who qualifies for first-time penalty abatement?

Not just for anyone who made a mistake on their taxes for the first time can qualify for the FTA program. Remember, the IRS intended the initiative for taxpayers with a clean compliance history. The IRS may agree to waive penalties you owe if you meet the following criteria:

• No other penalties in the past three tax years
• Filed all required returns or filed for an extension
• Paid or arranged to pay any tax due

Take note that the FTA program does not kick in automatically. You will have to apply or request for it. You can request it by phone, in writing or through a tax professional.

Other options if you don’t qualify for FTA

If you do not meet the FTA criteria, don’t lose hope. The IRS offers other penalty relief options, such as:

• Reasonable cause: If circumstances beyond your control prevented you from meeting your tax obligations, you might qualify for reasonable cause relief.
• Statutory exceptions: Situations like certain disasters or military service may exempt you from penalties.
• Administrative waiver: In some cases, the IRS may waive penalties due to its own errors or delays.

Speaking with a legal professional may help you explore other options. They can also review your case and guide you through the application process for FTA or other abatement programs.