Most people who get hit with an IRS penalty assume they need a good story to get it removed. A death in the family. A hurricane. A hospital stay. If they do not have one, they pay the penalty and move on.

That is a mistake, and often an expensive one. The IRS has a penalty relief rule that requires no story at all. It is called First Time Abate, or FTA, and it turns on a single question: how did you behave for the three years before this one?

If the answer is well, the penalty can come off. No explanation of why you were late. No proof of hardship. The relief is based on your history, not your excuse.

What first-time abatement actually is

FTA is an administrative waiver. That means it is not written into the Internal Revenue Code. It is IRS policy, set out in the Internal Revenue Manual at IRM 20.1.1.3.3.2.1. The IRS implemented it in 2001 for tax periods ending after December 31, 2000.

The manual describes it as relief available the first time a taxpayer is subject to one or more of the covered penalties for a single return. The IRS is rewarding a track record. If you have filed and paid on time for years and then stumbled once, the agency treats the stumble as a stumble.

Because it is an administrative waiver and not reasonable cause, the IRS does not weigh your reasons at all. The irs.gov page on the waiver says you do not need to name FTA in your request or send supporting documents. The IRS reviews its own records to see whether you meet the requirements.

Which penalties it covers

FTA covers three families of penalties, and only three. Per IRM 20.1.1.3.3.2.1 and the IRS's own page:

  • Failure to file under IRC 6651(a)(1), plus the partnership and S corporation late-filing penalties under IRC 6698(a)(1) and IRC 6699(a)(1).
  • Failure to pay under IRC 6651(a)(2) for tax shown on the return, and IRC 6651(a)(3) for tax assessed later and not paid after notice and demand.
  • Failure to deposit under IRC 6656, the penalty employers and other depositors face for late or improper deposits.

The IRS says these penalties are eligible regardless of amount. There is no dollar cap on FTA. A $90 penalty and a $90,000 penalty are judged by the same history test.

What FTA does not cover matters just as much. It does not touch the accuracy-related penalty under IRC 6662, the estimated tax penalty, the civil fraud penalty, or information return penalties. For those, you need a different path. The accuracy-related penalty defenses work under their own rules, and so does the estimated tax penalty.

The three-year history test

Here is the test, taken from the IRS's description of a timely compliance history:

  • The same return type as the penalized return was timely filed for the prior three years, or 12 consecutive quarters for quarterly filers.
  • No penalty was assessed in those three years, except the estimated tax penalty. A penalty that was assessed and later abated for reasonable cause or IRS error does not count against you.
  • For business taxpayers, the IRS did not waive the failure-to-deposit penalty four or more times in the prior three years, and the deposit penalty was not charged for avoiding the Electronic Federal Tax Payment System (EFTPS).

Read that second bullet carefully. A prior penalty removed for reasonable cause does not disqualify you. A prior penalty removed under FTA does. The manual says a module where penalties were reversed with the FTA penalty reason codes counts against you during the look-back period. That is the whole point of the name. It is first-time abatement, not every-time abatement.

The history is checked by return type. A spotless Form 1040 record does not help a late Form 941. The manual also requires the IRS to check both spouses when a joint return is penalized and the prior years were filed differently. If your spouse had a rough patch on a separate return, that can matter.

Returns FTA will not reach

The IRS will not apply FTA to returns with an event-based filing requirement, meaning returns filed once or infrequently. It will not apply it to the daily delinquency penalty or to information reporting that depends on another filing.

The manual gives examples of returns where FTA is not available: Form 706, Form 709, Form 990, Form 1099 series information returns, Form 8300, Form 3520 and Form 3520-A, and, subject to an exception in IRM 20.1.9, Forms 5471 and 5472. If your penalty came from one of these, FTA is the wrong tool. Reasonable cause or a statutory exception is where you start.

How to ask for it

The IRS page gives two routes. Call the toll-free number in the top right corner of your notice, or send a written statement or Form 843, Claim for Refund and Request for Abatement, to the address in the Form 843 instructions.

The phone is usually the fastest route for a straightforward FTA case. The manual says FTA carries no oral statement dollar threshold, which means an employee can grant it on a call without a signed written request. If you want the mechanics, I walk through them in requesting penalty abatement by phone and the paper route in the Form 843 guide.

One practical point. Before any relief is considered, the manual tells employees to fix the account first: apply missing payments, post extensions that were filed but not recorded, correct the tax. A penalty that disappears because a misapplied payment gets moved never needed FTA in the first place. Make sure the account is right before you spend your waiver on it.

What happens if you still owe the tax

You do not have to pay the balance in full to get FTA. But you should understand what it does and does not stop.

If the tax on the module is not paid in full, the manual allows the IRS to abate the failure-to-pay penalty assessed so far, but the penalty keeps computing on the unpaid tax. The IRS page says the same thing: under FTA, the failure-to-pay penalty may continue to accrue until the tax is fully paid. The manual adds that once the tax is paid, the additional failure-to-pay penalty can be removed under the same waiver.

So the practical sequence for many people is simple. Request FTA now to remove what has been assessed. Pay the balance or get on a plan. Then follow up to remove whatever accrued after the first abatement. Interest is a separate charge, but the IRS says it automatically reduces or removes the interest tied to a penalty when the penalty is reduced or removed.

The 2025 change: automatic relief

The IRS is moving from FTA to a new program called Automatic Exemption from Penalty, or AEP, which the agency says begins in summer 2026 for 2025 tax year returns and 2026 quarterly returns. Under AEP, a taxpayer with the same clean history is not assessed the penalty in the first place, and no request is needed. FTA still applies to earlier years and to returns not considered for AEP. I cover the details in Automatic Exemption from Penalty.

If you do not meet the history test, you are not out of options. You move to reasonable cause, which looks at what happened rather than your record. The two work differently, and the order matters. First-time abatement vs. reasonable cause explains why. For a broader view of how the firm handles these requests, see the penalty abatement overview on getirshelp.com.

Three clean years earned you this. Use it.