The notice says you filed late, and the penalty attached to it runs into the hundreds of dollars. What the notice does not say is that if your record for the previous three years is clean, one phone call can often make that penalty disappear. The IRS calls it First Time Abate, and it is the most commonly granted penalty relief the agency offers, largely because the taxpayers who qualify vastly outnumber the taxpayers who ask.
The rules are spelled out on the IRS’s administrative penalty relief page, and they amount to a reward for a good compliance history: slip up once after years of filing and paying on time, and the government will waive the fine. Here is who qualifies, how to ask, and the significant change arriving this summer that makes the break automatic.
The penalties it erases
First Time Abate applies to the three penalties that account for most of what individuals and small businesses get charged: the failure-to-file penalty, the failure-to-pay penalty, and, for employers, the failure-to-deposit penalty on payroll taxes. It also reaches the late-filing penalties on partnership and S corporation returns. There is no dollar cap; if you qualify, the penalty comes off regardless of size, and the interest that was charged on the penalty itself comes off with it.
These penalties are worth erasing. The failure-to-file penalty alone runs 5 percent of the unpaid tax per month, up to 25 percent, which is why a return filed a few months late can generate a penalty that dwarfs the eventual interest. The failure-to-pay penalty is gentler at 0.5 percent per month but grinds up to the same 25 percent ceiling over time.
The clean-record test
Qualifying comes down to a three-year lookback. You must have filed the same type of return on time for the three prior years, or the prior 12 quarters for quarterly filers, and had no penalties in that window, or had any penalty removed for reasonable cause. An estimated tax penalty in a prior year does not disqualify you. You also need to be current: all required returns filed, and the tax on the notice paid or under a payment arrangement. Businesses face a couple of extra conditions around repeated deposit waivers.
Note what is not required: a good excuse. First Time Abate does not ask why you were late. The dog can have eaten nothing at all; the relief turns entirely on your history, which the IRS checks in its own records while you wait.
How to ask
The fastest route is the toll-free number printed in the top corner of your penalty notice. Ask for penalty relief; you do not need to invoke the phrase First Time Abate or send any documentation, because the agent reviews your account on the spot. If the penalty is too large to remove by phone, or you prefer paper, you can send a written request or file Form 843, Claim for Refund and Request for Abatement, including for penalties you already paid.
Two tactical points improve the outcome. First, pay the underlying tax before or when you call, because the failure-to-pay penalty keeps accruing until the tax is paid, and abating a penalty that is still growing wastes the request. Second, if you have both a lousy excuse year and a genuinely catastrophic year in your history, consider saving First Time Abate. Reasonable cause relief, the other main avenue, covers situations like serious illness, disasters, and unavoidable records loss, and using reasonable cause where it honestly applies preserves your clean-record card for the year you have no excuse. The IRS’s penalty relief overview maps the options.
The automatic version arriving now
The biggest news in this corner of tax administration is that the request may soon be unnecessary. Beginning in the summer of 2026, the IRS is transitioning First Time Abate into what it calls Automatic Exemption from Penalty. Under the new approach, if you file or pay late but your prior three years, or 12 consecutive quarters, show timely compliance, the IRS simply will not assess the failure-to-file, failure-to-pay, or failure-to-deposit penalty in the first place. The relief applies starting with 2025 tax year returns and 2026 quarterly returns, covers the main individual, business, and payroll return series, and announces itself by letter: you receive a notice explaining that penalties were not charged because of your history.
The old request-based process still matters for earlier years and for penalties that slip through, so the phone number on the notice remains worth dialing. But the direction is clear, and it fixes the long-standing unfairness of a break that went disproportionately to people who knew to ask for it.
The habit that keeps you eligible
Every version of this relief, old and new, prices the same asset: three consecutive clean years. That is one more concrete reason to file on time even in years you cannot pay in full, since filing stops the 5 percent monthly penalty and preserves your record, while the balance itself can ride on a payment plan. A taxpayer who protects the streak has a get-out-of-penalty card sitting in the IRS’s records, waiting. Now, increasingly, the IRS will play it for you. Until then, it only works if you ask.
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