If you’ve fallen behind on your taxes, you already know the IRS can hit hard. The bill is bad enough, but with a pile of penalties and interest that seem to grow overnight, it gets worse. The good news? There IS a way to get some relief. It’s called penalty abatement, and it can save you hundreds or even thousands of dollars.
At ETS Tax Relief, we specialize in helping taxpayers get back on track. We understand how penalty abatement works, and it’s one of the first steps toward resolving your tax issue.
What Is Penalty Abatement?
Penalty abatement is the IRS’s way of saying, “We’ll give you a break this time.” It’s a formal request asking the IRS to remove or reduce penalties if you have a valid reason for being out of compliance, such as filing late or paying taxes late.
The IRS can charge several types of penalties, including:
– Failure to file (5% per month, up to 25%)
– Failure to pay (0.5% per month up to 25%)
– Failure to deposit (for businesses that miss payroll deposits)
– Accuracy-related penalties (if there was an error on a return)
When these add up, they can double the size of your original tax debt. The abatement provides relief and allows you to focus on the tax debt. There are two main types of penalty abatement – First Time Abatement and Reasonable Cause Abatement.
There are two main types of penalty abatement – First Time Abatement and Reasonable Cause Abatement.
First Time Penalty Abatement
The First Time Penalty Abatement (FTA) is usually the easiest and fastest form of penalty relief. You can request it over the phone, by letter, or as part of a professional representation package. It’s the “one-time” slap on the wrist that says “We’ll allow you to get away with it this time, but don’t do this again!”
The FTA is a misnomer though. Taxpayers are generally eligible for FTA every three years.
Example: You request First Time Abatement for a Failure to Pay Penalty on your 2025 tax return. You don’t have any unresolved penalties on tax returns for 2012, 2023 and 2024 and didn’t get First Time Abatement relief. Based on this information, you have a good history of compliance, and will be eligible for the FTA again.
Reasonable Cause Penalty Abatement
The Reasonable Cause Abatement is for taxpayers who have a legitimate reason for not filing or paying on time. Some examples include: Natural disasters, fires, serious illness or death in the family, relying on bad advice from a tax professional, inability to obtain records, or other circumstances beyond your control.
The IRS looks for two things: what happened and how you acted once you could comply again. The more documentation you provide (hospital records, insurance claims, correspondence), the stronger your case.
Example: A taxpayer gave his tax professional his original tax documents. When he returned to complete his filings, the tax professional had gone out of business, and there was no way for the taxpayer to contact the professional. A year later, someone else opened a business in the same spot. The new company had the taxpayer’s documents. The taxpayer filed his tax return immediately. He requested a Reasonable Cause Penalty Abatement.
How to Request Penalty Abatement
You can request a penalty relief:
– By phone: For smaller balances or first-time cases
– By mail: Submitting Form 843, Claim for Refund and Request for Abatement
– Through your representative: If you hire ETS Tax Relief, we handle the process directly with the IRS.
Every request should include:
– The tax year(s) in question
– The type of penalty
– The reason for the delay
– Supporting documentation
The IRS penalizes millions of taxpayers each year, but only a fraction ever actually ask for relief. Don’t leave money on the table. Whether your issue stems from unfiled returns, late payments, or unexpected life events, penalty abatement can be a crucial step in saving you money in the long run.
LuSundra Everett, EA is The Home Biz Tax Lady. She is a tax expert located in Chester, VA who will find the right solution for you! As an Enrolled Agent licensed through the Internal Revenue Service, LuSundra is authorized to represent taxpayers in all 50 states against the IRS and your state!
Through her work with ETS Tax Relief, she helps high income non-filers and small-business owners face the IRS with confidence, clarity, and a plan.
When you’re dealing with IRS letters, tax debt, or business tax issues, the right representation makes all the difference. At ETS Tax Relief, we work with individuals and business owners across Virginia to resolve tax problems, prevent future issues, and restore peace of mind.
If you’re ready to put your tax troubles behind you, visit http://www.etstaxrelief.com to learn more about how we can help.
