First-time abatement has a reputation as the easy button of penalty relief. Call, ask, done. For many people it really is that simple.
But the rules in IRM 20.1.1.3.3.2.1 contain details that trip people up. Some of these mistakes get the request denied. Others get it granted on the wrong year, or leave money on the table. Here are the ones that come up again and again.
1. Asking for FTA on a later year when an earlier year was also penalized
FTA applies to a single tax period, and only to a period where the three-year look-back is clean.
The manual's example is a Form 941 filer who was compliant for three years and then got deposit penalties in all four quarters of the next year. FTA can apply only to the first of those quarters. The other three need reasonable cause.
The same logic hits individuals. If you were penalized for 2022 and 2023 and you ask for FTA on 2023, the 2022 penalty sits inside 2023's look-back period. The earliest year is the only one with a clean look-back. Ask for that one.
2. Assuming a first request equals a first offense
This one surprises people. The manual says the FTA waiver is not applicable based solely on a taxpayer's first request for penalty relief.
If you had penalties in the prior three years and simply never asked to have them removed, those unreversed penalties disqualify you. Not asking before does not make your record clean. The history test is about what is on your account, not what you have requested.
3. Ignoring your spouse's history on a joint return
When a joint return is penalized, the IRS does not look only at the primary taxpayer. The manual says that if the prior three years were not filed with the same filing status and the same primary and secondary Social Security numbers, the FTA criteria must be met for both spouses.
Newly married couples, couples who filed separately in a prior year, and couples where one spouse previously filed jointly with someone else should check both histories before they assume FTA is available. A penalty on your spouse's separate return from two years ago can block relief on this year's joint return.
4. Using FTA on the wrong kind of return or penalty
FTA covers failure-to-file, failure-to-pay and failure-to-deposit penalties. Nothing else. It does not cover the accuracy-related penalty, the estimated tax penalty, or information return penalties.
It also does not apply to event-based returns. The manual lists Forms 706, 709, 990, 1099 series returns, 8300, 3520 and 3520-A, and, subject to an exception in IRM 20.1.9, Forms 5471 and 5472. Asking for FTA on a late Form 709 wastes time. Those cases need reasonable cause or a statutory exception.
Remember too that the history test is by return type. A perfect personal return history does nothing for a late Form 941 on your business.
5. Spending FTA on a penalty that was the IRS's fault
Before any relief is considered, IRM 20.1.1.3 tells IRS employees to analyze and correct the account. Missing payments, unposted extensions and tax adjustments get fixed first, and penalties computed by the system adjust automatically when the corrections post.
The FTA section adds a caution: do not grant FTA if there is clear and convincing evidence the taxpayer actually complied, or if the penalty resulted from an IRS error. Correct the error instead.
This matters because an FTA abatement uses up your clean history for the next three years. A correction of IRS error does not. If you paid on time and the payment went to the wrong year, say so and prove it with your bank record. Do not just ask for FTA because it is quicker.
6. Forgetting the failure-to-pay penalty keeps running
If you still owe the tax, FTA removes the failure-to-pay penalty assessed so far but does not stop it from accruing. The IRS page says the failure-to-pay penalty may continue to accrue until the tax is fully paid, and the manual tells employees to inform the taxpayer of that.
The manual also says that after the tax is paid in full, the additional failure-to-pay penalty can be removed under the FTA waiver. Many people never go back for that second step. Calendar it. When the balance hits zero, call and ask for the post-abatement accruals to come off too.
Under the new Automatic Exemption from Penalty, which starts with 2025 returns, the IRS says the failure-to-pay penalty does not accrue on unpaid tax. For older years, the two-step process still applies.
7. Not checking whether the penalty is even correct
Before you ask anyone to forgive a penalty, ask whether you owe it. Was the return actually late? Did you file an extension? A valid extension changes the failure-to-file computation entirely. Was the payment actually late, or was it posted late?
The manual treats an extension of time to file that did not post to the account as an example of IRS error. So is a math error in a manually computed penalty. Pull your account transcript, compare the dates against your own records, and make sure the penalty is right before you treat it as a debt to be waived.
8. Letting someone call without proper authorization
IRM 20.1.1.3 says the IRS will consider penalty relief requests from third parties, including representatives without a power of attorney. But it also says no taxpayer information may be discussed with a third party unless a valid power of attorney or other acceptable written authorization is on file.
In practice, that means an unauthorized helper can submit information but cannot have a real conversation about your account. If a bookkeeper, relative or accountant is going to handle the call, get the right form on file first. For representation, that is Form 2848. The manual notes that a Form 8821 does not make someone your authorized representative for an appeal.
9. Treating a denial as final
If the FTA request is denied, find out why. The IRS must send written notice of a denial with an explanation and appeal rights. Sometimes the denial is correct: a prior penalty really does sit in the look-back period. Sometimes it is based on a module that was wrongly read, a secondary SSN that was checked when it should not have been, or a prior penalty that should itself have been removed.
If the prior-year penalty that blocked you can be removed for reasonable cause or IRS error, your history changes, and FTA may become available on the later year. Work the earliest problem first. Then appeal what is left if the facts support it.
The pattern behind the mistakes
Every one of these errors comes from treating FTA as a slogan instead of a rule. The waiver has precise criteria, applies to precise penalties on a precise tax period, and gets used up when it is granted.
Read your account before you call. Know which year is the first penalized year. Know whether the penalty belongs on your record at all. Then ask for exactly what the rules allow. If you want the phone process step by step, see requesting penalty abatement by phone.
Ten minutes of preparation is the difference between a clean result and a wasted waiver.