✓ IRS Penalty Abatement

Stop paying penalties. Penalties can add 25–50% to your tax bill. We get them eliminated.

📞 Request Penalty Abatement ← Back to IRS Problems

📋 The Problem: IRS Penalties Compound Fast

If you owe the IRS, penalties can be 25–50% of your total tax bill — and they compound every month.

📊 Example: $20,000 Tax Bill

  • Original tax owed: $20,000
  • After 24 months: ~$30,000+ (with failure-to-file, failure-to-pay penalties, and interest)
  • Penalties alone: ~$7,000–$10,000

The good news: Unlike interest, penalties can be eliminated.

Why pay penalties if you don't have to? We file for penalty abatement — and in many cases, get 25–50% of your bill eliminated.

⚠️ The 4 Most Common IRS Penalties

Penalty Type Rate Maximum Trigger
Failure to File 5% per month 25% (max) Didn't file return by deadline
Failure to Pay 0.5% per month 25% (max) Didn't pay tax by deadline
Accuracy-Related 20% 20% (one-time) Underreported income or overstated deductions
Estimated Tax Penalty Variable No maximum Underpaid estimated taxes (self-employed, 1099 income)

💡 Frank-ism:

"The IRS charges penalties automatically. They don't volunteer to remove them. You have to ask — and you have to ask correctly."

⚠️ Special Note: Failure to File = Higher Penalty

If you didn't file your tax return:

  • ❌ Failure-to-File penalty: 5% per month (up to 25%)
  • ❌ Minimum penalty: $435 (if return is >60 days late)
  • ❌ Compounds faster than Failure-to-Pay (10x worse)

Bottom line: Always file — even if you can't pay. Late filing costs you 10x more than late payment.

✅ How to Get IRS Penalties Removed

There are 3 main ways to get penalties abated:

EASIEST

1. First-Time Penalty Abatement (FTA)

Best for: Clean tax history

Qualifications:

  • ✓ No penalties in prior 3 years
  • ✓ Filed all required returns
  • ✓ Paid (or arranged to pay) all taxes

✅ Abates: Failure-to-File, Failure-to-Pay
❌ Does NOT abate: Accuracy-Related, Estimated Tax

Approval rate: ~80% if you qualify

Lori-ism: "FTA is the IRS's 'one free pass.' Use it wisely."

MOST COMMON

2. Reasonable Cause

Best for: Documented hardship or circumstances beyond your control

Examples:

  • ✓ Death, serious illness, incapacitation
  • ✓ Fire, natural disaster, casualty
  • ✓ Inability to obtain records
  • ✓ Errors by tax preparer (not you)
  • ✓ IRS error or bad advice
  • ✓ Business disruption (e.g., COVID-19 shutdowns)

✅ Abates: All penalty types (if you can prove cause)

Approval rate: ~40–60% (depends on documentation)

SPECIAL CASES

3. Statutory Exception

Best for: Rare, specific scenarios

Examples:

  • ✓ IRS error in processing
  • ✓ Written IRS advice (proved to be wrong)
  • ✓ Combat zone service
  • ✓ Presidentially declared disaster

✅ Abates: All penalty types (if statute applies)

Approval rate: ~90%+ (if you meet statutory criteria)

💼 Lori-ism:

"Reasonable Cause is where most people think they qualify — but documentation is everything. We've seen the IRS deny requests because the explanation wasn't specific enough or the docs didn't match."

🛠️ How We Get Your Penalties Abated

1

Analyze Penalty History & Eligibility

We pull your IRS transcript and review:

  • ✓ Which penalties were assessed (Failure-to-File, Failure-to-Pay, Accuracy-Related, Estimated Tax)
  • ✓ Penalty history (last 3 years — do you qualify for FTA?)
  • ✓ Timeline of events (filing dates, payment dates, IRS notices)

Goal: Determine which abatement method has the highest approval odds.

2

Gather Documentation

For Reasonable Cause requests, we compile evidence:

  • ✓ Medical records (if illness or incapacitation)
  • ✓ Death certificates (if applicable)
  • ✓ Police/fire reports (if casualty or disaster)
  • ✓ Business records (if disruption, e.g., COVID-19 shutdowns)
  • ✓ Correspondence with IRS or tax preparer (if reliance on advice)

⚠️ Important: Generic explanations ("I was busy" or "I forgot") are not Reasonable Cause. The IRS requires specific, documented events beyond your control.

3

Prepare & Submit Form 843

We file Form 843 (Claim for Refund and Request for Abatement) with:

  • ✓ Detailed written explanation (citing Reasonable Cause or FTA)
  • ✓ Supporting documents
  • ✓ Legal citations (IRS Code, Revenue Procedures, case law)

Optional: In some cases, we request abatement via phone call to IRS (faster for FTA).

Deadline: Typically 3 years from the return due date or 2 years from when you paid the penalty (whichever is later)

4

IRS Reviews & Responds

Timeline: 8–12 weeks (sometimes faster for FTA)

Possible outcomes:

  • ✅ Full abatement: All penalties removed
  • ✅ Partial abatement: Some penalties removed (e.g., Failure-to-File abated, but not Failure-to-Pay)
  • ❌ Denial: IRS determines you don't qualify

If denied: We file an appeal or try an alternative abatement method.

5

Penalties Abated → Balance Reduced

Once approved:

  • ✅ Penalties removed from your account
  • ✅ New balance calculated (tax + interest only)
  • ✅ Refund issued (if you already paid the penalties)

Typical savings: 25–50% of total IRS bill

⚖️ Frank-ism:

"The IRS won't tell you about FTA or Reasonable Cause. They'll just keep charging penalties. Most taxpayers overpay by thousands because they don't know to ask for abatement."

📈 Real Result: $18,000 in Penalties Eliminated

🏠 The Problem

Client: Real estate investor, Midwest
IRS Debt: $140,000 (tax + penalties + interest)
Penalties: $32,000 (Failure-to-File and Failure-to-Pay for 3 years of unfiled returns)

🔍 Our Discovery

  • ✓ Client qualified for First-Time Penalty Abatement (FTA) — clean history prior to these 3 years
  • ✓ Also established Reasonable Cause: severe health issue (hospitalization) during filing deadline; provided medical records

✅ The Resolution

  • ✅ Filed Form 843 with FTA request + Reasonable Cause explanation
  • ✅ IRS abated $18,000 in penalties
  • ✅ Remaining penalties ($14,000) reduced via Reasonable Cause to $8,000
  • ✅ Total penalties eliminated: $24,000
  • ✅ New balance: $116,000 (down from $140K)
$32K Original Penalties
$18K Penalties Abated (FTA)
$6K Additional Penalties Reduced
$24K Total Savings
6 Weeks From Request to Approval

🔒 The Prevention

  • ✓ Enrolled in Annual Service Plan (ASP) to ensure timely filings going forward
  • ✓ Set up quarterly estimated tax payments (via REITaxCPA.com)

💬 Client: "I didn't know the IRS could remove penalties. Frank saved me $24K in 6 weeks."

❓ Frequently Asked Questions

Can IRS interest be abated like penalties? ▼

Usually no. Interest abatement is very rare and only applies if:

  • ✓ IRS error or delay caused additional interest to accrue (e.g., IRS took 18+ months to process your return)
  • ✓ You can prove the IRS was at fault

⚠️ Bottom line: Penalties can be abated regularly; interest almost never.

Frank-ism: "Don't count on interest abatement. Focus on penalties — that's where the real savings are."

Can I get penalties abated more than once? ▼

Yes — but it depends on the method:

  • ✓ First-Time Penalty Abatement (FTA): Can be used every 3 years (if you maintain a clean compliance history)
  • ✓ Reasonable Cause: No limit — you can request abatement every time you have documented Reasonable Cause
  • ✓ Statutory Exception: No limit (if circumstances apply)

Example: Use FTA in 2022 → stay compliant for 3 years → use FTA again in 2025

How long does penalty abatement take? ▼
  • Phone request (FTA): 1–3 weeks (if IRS representative approves on the spot)
  • Form 843 (written request): 8–12 weeks
  • Appeal (if denied): 3–6 months

📞 We handle the entire process — from initial request to appeal (if needed).

What if my penalty abatement request is denied? ▼

We appeal. You have 30 days from the denial date to file an appeal with the IRS Office of Appeals.

Our process:

  • ✓ Review the denial reason
  • ✓ Strengthen documentation
  • ✓ File formal appeal
  • ✓ Present case to Appeals Officer

Success rate: ~50–60% of denied FTA/Reasonable Cause requests are reversed on appeal (with proper representation)

Should I request penalty abatement before or after resolving my tax debt? ▼

Ideally, before. Here's why:

  • ✅ Lower balance = lower payment (if you're setting up an installment agreement or OIC)
  • ✅ Easier to get penalties abated before you pay (the IRS is more motivated to negotiate)

But: If you've already paid, you can still request a refund of the penalties via Form 843.

Deadline: 3 years from return due date or 2 years from payment date (whichever is later)

Can I request penalty abatement myself? ▼

Yes — you can call the IRS or mail Form 843.

⚠️ But:

  • ❌ The IRS won't volunteer which abatement method you qualify for
  • ❌ Generic explanations ("I was busy") are rejected
  • ❌ Mistakes = denial (and you've used up your FTA eligibility)

✅ We handle it: We know exactly how to frame your request, which documentation to include, and how to cite the relevant IRS codes.

Lori-ism: "The IRS representatives on the phone don't always know the rules. We've had to educate them on FTA eligibility more than once."

What if I have multiple years of penalties? ▼

We request abatement for all eligible years.

Strategy:

  • ✓ Use FTA for the earliest year (if you qualify)
  • ✓ Use Reasonable Cause for subsequent years (if circumstances apply)
  • ✓ File separate Form 843s for each tax year

Result: Maximum penalties abated across all years

📞 Stop Paying Penalties You Don't Owe

Penalties can be 25–50% of your tax bill. We get them eliminated.

CPA + EA Team | 25+ Years | Nationwide Service

Request Penalty Abatement 📞 Call 248-985-8100

💬 20-minute call with Frank or Lori. No pressure. Just clarity.

Disclaimer:

FixIRSTax | A Division of Strategic Planning Advisors LLC provides IRS resolution services. Information provided on this site is for educational purposes only and does not constitute formal tax, legal, or investment advice. Please consult your advisor before making financial decisions.

Information provided on this site is for educational purposes only and does not constitute formal tax, legal, or investment advice. Please consult your advisor before making financial decisions.

© 2026. Strategic Planning Advisors LLC. All rights reserved.