Complete Guide
IRS First Time Abate (FTA) Policy: Complete 2026 Guide
Comprehensive guide to the IRS First Time Abate policy. Learn eligibility requirements, how to request penalty relief, and maximize your chances of approval.
Key Takeaways
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penalties eligible for first-time abatement
What Is First Time Abate?
First Time Abate (FTA) is an administrative waiver the IRS provides to taxpayers who have a clean compliance history. Under Internal Revenue Manual (IRM) 20.1.1.3.6.1, the IRS will remove certain penalties for taxpayers who meet specific criteria—even without demonstrating reasonable cause.
Key Point: FTA is not a law passed by Congress. It's an internal IRS policy designed to encourage voluntary compliance by giving first-time offenders a second chance.
The policy recognizes that even compliant taxpayers can make mistakes, and penalizing them harshly for a first-time error may be counterproductive to the tax system's goals.
Penalties Eligible for FTA Relief
FTA applies to three specific penalty types under the Internal Revenue Code:
- 1. Failure to File Penalty (IRC §6651(a)(1))
- 5% of unpaid tax per month, up to 25% maximum
- Applies when you file your return after the due date
- 2. Failure to Pay Penalty (IRC §6651(a)(2))
- 0.5% of unpaid tax per month, up to 25% maximum
- Applies when you don't pay by the due date
- 3. Failure to Deposit Penalty (IRC §6656)
- 2-15% of the deposit amount depending on timing
- Applies to employment tax deposits
- Not Covered by FTA:
- Accuracy-related penalties (IRC §6662)
- Fraud penalties (IRC §6663)
- Estimated tax penalties (IRC §6654/6655)
- Information return penalties (IRC §6721/6722)
- Interest charges (never abated except for IRS errors)
FTA Eligibility Requirements
To qualify for First Time Abate, you must meet all three criteria established in IRM 20.1.1.3.6.1:
Requirement 1: Clean Penalty History
You must have no penalties (except estimated tax penalties) for the prior 3 tax years before the penalty year.
- The 3-Year Lookback Rule:
- If you're requesting FTA for 2024, the IRS examines 2021, 2022, and 2023
- Any failure-to-file, failure-to-pay, or failure-to-deposit penalty disqualifies you
- Estimated tax penalties (§6654/6655) do NOT count against you
- Penalties that were previously abated still count as penalties assessed
Requirement 2: Filing Compliance
You must have filed all currently required returns or filed a valid extension.
- What This Means:
- All tax returns for the penalty year and prior years must be filed
- Extensions count as timely filing for this requirement
- Substitute for Return (SFR) filings by the IRS don't satisfy this requirement
Requirement 3: Payment Compliance
You must have paid, or arranged to pay, any tax currently due.
- Acceptable Payment Arrangements:
- Full payment of the tax liability
- Approved Installment Agreement (Form 9465)
- Offer in Compromise (accepted)
- Currently Not Collectible status
Key Point: You don't need to pay the penalties to request FTA—only the underlying tax.
How to Request First Time Abate
You can request FTA through several channels:
Option 1: Phone Request
Call the IRS at the number on your notice (typically 800-829-1040 for individuals).
- Best Practices:
- Call early morning for shorter wait times
- Have your notice, SSN/EIN, and tax returns ready
- Specifically ask: "I'd like to request First Time Abate under IRM 20.1.1.3.6.1"
- Document the call: date, time, representative name, and outcome
Option 2: Written Request
Submit IRS Form 843 (Claim for Refund and Request for Abatement) or a written letter.
- What to Include:
- Your name, address, SSN/EIN
- Tax form and period
- Penalty type and amount
- Statement: "I request penalty abatement under the First Time Abate administrative waiver per IRM 20.1.1.3.6.1"
- Confirmation you meet all three requirements
What If FTA Is Denied?
FTA denial isn't the end. You have several options:
- 1. Request Reasonable Cause Consideration
- Immediately ask for reasonable cause review. Common grounds include:
- Death, serious illness, or unavoidable absence
- Fire, casualty, or natural disaster
- Inability to obtain records
- Erroneous advice from IRS or tax professional
- 2. Appeal the Decision
- Request a conference with an IRS Appeals Officer
- File Form 12203 (Request for Appeals Review)
- 3. Pay and File Refund Claim
- Pay the penalty to stop interest accrual
- File Form 843 claiming refund
- If denied, you can sue in federal court
Frequently Asked Questions
How do I know if I qualify for First Time Abate?
You qualify if you meet three requirements: (1) no penalties (except estimated tax) in the prior 3 tax years, (2) all required returns are filed, and (3) you've paid or arranged to pay the underlying tax. Check your IRS account transcript or Online Account to verify your penalty history.
Can I get FTA if I already paid the penalty?
Yes. If you paid the penalty and later realize you qualified for FTA, you can still request it. The IRS will refund the penalty amount plus interest. File Form 843 or call the IRS to request the abatement and refund.
Does FTA remove interest charges too?
No. FTA only removes the penalty itself. Interest charges on the underlying tax remain. However, if you paid the penalty and it's later abated, you'll receive interest on the refunded penalty amount.
How many times can I use First Time Abate?
FTA can be used once per penalty type within a rolling 3-year period. After using FTA, you'll need 3 consecutive clean years before qualifying again.
Can businesses use First Time Abate?
Yes. FTA applies to businesses for failure-to-file, failure-to-pay, and failure-to-deposit penalties. Business FTA is evaluated separately from individual FTA.
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