Getting rid of tax penalties
If you owe the IRS money, the tax bill will not only state the amount of taxes you owe but will also tack on interest and penalties. Abatement of penalties is when the IRS reduces or eliminates the penalties. The IRS is pretty lenient with waiving penalties. It's much harder to get interest waived. Most people with tax penalties should ask for the penalties to be abated. It never hurts to ask, and a large percentage of taxpayers do get their penalties removed or reduced. As soon as you receive a tax bill, you should send a letter to the IRS address listed in the notice requesting an abatement of penalties.
To have your penalties waived or reduced, you need to qualify for First Time Abate or show Reasonable Cause.
First Time Abate You may qualify for First Time Abate if you have a history of good tax compliance. You are considered having a good tax compliance history if you (1) filed the same return type, if required, for the past 3 tax years before the year you received the penalty. (2) Didn't receive any penalties during the prior 3 years, or any penalty was removed for an acceptable reason other than First Time Abate.
You can usually request First Time Abate over the phone. Call the IRS at the toll-free number at the top right corner of your notice or letter. You don't need to provide supporting documents in your request for relief. The IRS will review your account information to see if you meet the requirements for First Time Abate.
If you don't qualify for First Time Abate, then you can request abatement of penalties through Reasonable Cause.
Reasonable Cause A reasonable cause is essentially, "a good excuse." The IRS Internal Revenue Manual lists seven categories of reasonable cause for abating any tax penalty except fraud:
Examples of common reasonable cause explanations include:
When writing your letter to the IRS requesting the penalties to be abated you want to show "good faith." Good faith means that you were trying your best to file a correct tax return even if there ended up being errors on the tax return or if you filed your tax return late. If you have never had penalties assessed before, be sure to mention this in your letter. If you have never had tax penalties abated in the past, mention this in your letter. Showing a clean IRS record in the past is a good step to showing that your tax return was filed in "good faith."
When writing your letter requesting an abatement of penalties, state that you are requesting an abatement of penalties and explain what your reasonable cause is. Make a photocopy of the IRS notice and any documentation you are sending to the IRS. You do not want to send in your only copy of a notice or any documentation since the IRS could lose your letter. Attach a copy of the IRS notice showing the penalty, along with a copy of any documentation supporting your request. Keep a copy of your letter and documentation for your own records.
Mail the letter to the IRS address shown on the IRS tax notice you received.
Here is a sample letter requesting abatement of penalties:
To: Penalty Abatement Coordinator
IRS Service Center
P.O. Box XXXX
Whatever City, CA XXXXX
Re: Request for Penalty Abatement
From: John Doe
100 Main Street
Your City, State, Zip Code
SSN: XXX-XX-XXXX
August 10, 20xx
To Whom It May Concern:
I am requesting an abatement of penalties assessed for the late payment of taxes. See the enclosed IRS notice.
I paid my taxes late because I lost my job on December 3, 20xx and was not able to find a new job until May 9, 20xx. The resulting financial problems left me unable to pay my tax due by the April 15, 2026 payment deadline. I was able to pay my tax due on August 19, 20xx. On October 4, 20xx I received the enclosed IRS notice assessing interest and penalties on the late payment.
I have enclosed a check to pay for the interest due on the late payment. Please abate the penalties for reasonable cause. I can be reached at XXX-XXX-XXXX during daytime hours.
Thank you,
John Doe
Enclosed: IRS Tax Notice; Termination Notice from XYZ Corporation
To have your penalties waived or reduced, you need to qualify for First Time Abate or show Reasonable Cause.
First Time Abate You may qualify for First Time Abate if you have a history of good tax compliance. You are considered having a good tax compliance history if you (1) filed the same return type, if required, for the past 3 tax years before the year you received the penalty. (2) Didn't receive any penalties during the prior 3 years, or any penalty was removed for an acceptable reason other than First Time Abate.
You can usually request First Time Abate over the phone. Call the IRS at the toll-free number at the top right corner of your notice or letter. You don't need to provide supporting documents in your request for relief. The IRS will review your account information to see if you meet the requirements for First Time Abate.
If you don't qualify for First Time Abate, then you can request abatement of penalties through Reasonable Cause.
Reasonable Cause A reasonable cause is essentially, "a good excuse." The IRS Internal Revenue Manual lists seven categories of reasonable cause for abating any tax penalty except fraud:
- Death or serious illness of the taxpayer or immediate family.
- Unavoidable absence.
- Destruction of the business or records by fire or other casualty.
- Inability to determine the tax because of reasons beyond the taxpayer's control.
- Civil disturbances.
- Lack of funds, but only when the taxpayer can demonstrate the exercise of ordinary business care and prudence, and
- Other reasons establishing that the taxpayer exercised ordinary business care but could not comply within the prescribed time limits.
Examples of common reasonable cause explanations include:
- Medical problems for you or a family member
- Lost or unavailable tax records
- Financial problems such as the loss of a job
- Personal problems such as a divorce or alcoholism that led to financial problems
- Serious life disruptions such as fire, flood, or illness or death of a family member
- Bad tax advice from an accountant or tax attorney
- Bad tax advice from the IRS (the IRS customer support reps on the IRS help line give a wrong answer about a third of the time)
- You mailed your tax return to the wrong IRS office
When writing your letter to the IRS requesting the penalties to be abated you want to show "good faith." Good faith means that you were trying your best to file a correct tax return even if there ended up being errors on the tax return or if you filed your tax return late. If you have never had penalties assessed before, be sure to mention this in your letter. If you have never had tax penalties abated in the past, mention this in your letter. Showing a clean IRS record in the past is a good step to showing that your tax return was filed in "good faith."
When writing your letter requesting an abatement of penalties, state that you are requesting an abatement of penalties and explain what your reasonable cause is. Make a photocopy of the IRS notice and any documentation you are sending to the IRS. You do not want to send in your only copy of a notice or any documentation since the IRS could lose your letter. Attach a copy of the IRS notice showing the penalty, along with a copy of any documentation supporting your request. Keep a copy of your letter and documentation for your own records.
Mail the letter to the IRS address shown on the IRS tax notice you received.
Here is a sample letter requesting abatement of penalties:
To: Penalty Abatement Coordinator
IRS Service Center
P.O. Box XXXX
Whatever City, CA XXXXX
Re: Request for Penalty Abatement
From: John Doe
100 Main Street
Your City, State, Zip Code
SSN: XXX-XX-XXXX
August 10, 20xx
To Whom It May Concern:
I am requesting an abatement of penalties assessed for the late payment of taxes. See the enclosed IRS notice.
I paid my taxes late because I lost my job on December 3, 20xx and was not able to find a new job until May 9, 20xx. The resulting financial problems left me unable to pay my tax due by the April 15, 2026 payment deadline. I was able to pay my tax due on August 19, 20xx. On October 4, 20xx I received the enclosed IRS notice assessing interest and penalties on the late payment.
I have enclosed a check to pay for the interest due on the late payment. Please abate the penalties for reasonable cause. I can be reached at XXX-XXX-XXXX during daytime hours.
Thank you,
John Doe
Enclosed: IRS Tax Notice; Termination Notice from XYZ Corporation
