Yes, you can often get the IRS to remove penalties, and in some cases interest along with them, but the two work very differently. Penalties come off through two main programs: First Time Abatement, which is granted based on a clean compliance record, and reasonable cause relief, which requires documenting why you couldn’t meet your obligation. Interest almost never goes away on its own. It shrinks automatically when a penalty is removed, because the IRS recalculates interest on the lower balance, but direct interest abatement is reserved for narrow situations where the IRS itself caused the delay.
Knowing which path fits your situation is most of the battle. People regularly pay penalties they could have had wiped out with a ten-minute phone call, and others send in lengthy written explanations when a simpler request would have worked.
Penalties Versus Interest
Penalties are charges the IRS imposes for noncompliance, such as filing late or paying late. Interest is the cost of borrowing time on money you owed the government, and it compounds daily from the original due date of the return.1Internal Revenue Service. Quarterly Interest Rates The IRS has formal procedures for removing penalties. It has very few for removing interest.
That distinction drives everything that follows. If you focus your energy on the penalty and win, the interest attached to that penalty disappears with it. If you go after the interest directly, you’re fighting an uphill battle under a narrow statute.
First Time Abatement: The Easiest Path
First Time Abatement is the fastest and simplest way to get a penalty removed. It applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties. You don’t have to explain what went wrong or submit any documentation. The IRS grants it based purely on your compliance history.2Internal Revenue Service. Administrative Penalty Relief
Three things have to be true to qualify:
- You filed the same type of return for the three tax years before the penalty year, and none of those years had an unreversed penalty. A prior penalty removed for reasonable cause still counts as clean. A prior First Time Abatement does not.3Internal Revenue Service. IRM Part 20.1.1 – Introduction and Penalty Relief
- The return for the penalty year is already filed.
- You’ve paid the tax owed, or you have an active payment arrangement in place.
The actual request is usually a phone call. Call the number on your penalty notice with the notice in hand. The representative can check your account and process the abatement on the spot if you meet the criteria.4Internal Revenue Service. Penalty Relief You don’t need to say “First Time Abatement” by name or submit any forms. This is where most people should start, and it’s the option that gets underused the most.
Reasonable Cause: When Life Got in the Way
If you don’t qualify for First Time Abatement, the next option is showing you had reasonable cause for the failure. The standard asks whether you exercised ordinary business care and prudence but still couldn’t meet the deadline. The bar is higher than First Time Abatement, and you’ll need documentation.5Internal Revenue Service. Penalty Relief for Reasonable Cause
Simply not having money is not enough on its own. You have to show the lack of funds came from circumstances you couldn’t control, and that you tried to comply as soon as you could.
Circumstances that commonly qualify:
- Serious illness or incapacitation of you or an immediate family member, supported by hospital records or a doctor’s letter showing the relevant dates.5Internal Revenue Service. Penalty Relief for Reasonable Cause
- A death in the family during the filing period.
- Natural disaster or casualty — fire, flood, hurricane, or similar event that destroyed records or displaced you.
- Erroneous written advice from the IRS. If you requested guidance in writing, gave accurate information, and reasonably relied on an incorrect written response, the IRS is required to abate the resulting penalty.6Office of the Law Revision Counsel. 26 USC 6404 – Abatements
The written explanation matters enormously. “I was going through a difficult time” will be denied. The IRS wants specific dates, a clear timeline connecting the event to the missed deadline, and evidence that you took steps to comply as soon as the obstacle was removed. A bare assertion of cause, without supporting facts, won’t meet the standard.
Relying on a Tax Advisor
Reasonable cause can also cover reliance on a tax professional who gave you bad advice, though it’s harder to prove than the categories above. The IRS looks at whether you gave the advisor all necessary information, whether the advisor was competent and experienced with the specific issue, and whether your reliance was reasonable.5Internal Revenue Service. Penalty Relief for Reasonable Cause Handing a shoebox of receipts to an unqualified preparer and hoping for the best won’t cut it.
What Good Documentation Looks Like
The difference between an approved and a denied reasonable cause request almost always comes down to documentation. Hospital records should show admission and discharge dates that overlap with the deadline. Insurance claims or FEMA correspondence support a casualty argument. Military deployment orders show the dates you were unavailable. Whatever the cause, build a paper trail where the dates make the connection between the event and the missed obligation obvious.
Why Interest Is So Hard to Remove
Interest is not a penalty, and the IRS does not waive it because you had a rough year. The agency charges interest as compensation for the time value of money, and it accrues whether you asked for an extension or not. There is only one narrow situation where interest can be abated directly: when an IRS employee’s unreasonable error or delay caused the interest to pile up while your case was being processed.7Office of the Law Revision Counsel. 26 U.S. Code 6404 – Abatements
The delay has to involve what the tax code calls a ministerial or managerial act, meaning something procedural or administrative rather than a substantive legal judgment.8eCFR. 26 CFR 301.6404-2 – Abatement of Interest An IRS agent misplacing your file and letting it sit for months qualifies. The IRS taking time to research a complex legal question about your return does not.
Several conditions must be met to request interest abatement:9Internal Revenue Service. Interest Abatement
- The error or delay happened after the IRS contacted you in writing about the issue.
- You or your representative did not contribute to the delay.
- The request covers income, estate, gift, or certain excise taxes. Employment taxes don’t qualify.
- You file the claim within three years of the return filing date or two years of the payment date, whichever is later.
Direct interest abatement is rare, and the IRS denies most requests. The more common route to lower interest is indirect. When the IRS abates a penalty, it recalculates and removes the interest that had been accruing on that penalty amount. For large penalties that sat for years, the interest component can exceed the penalty itself.
How to File the Request
For First Time Abatement, start with the phone call. The IRS can process it during the call if you qualify.2Internal Revenue Service. Administrative Penalty Relief
For reasonable cause abatement, a written submission is required. Use Form 843, Claim for Refund and Request for Abatement. It prompts you for your name, taxpayer identification number, the tax period, and the type of penalty. Attach your written explanation and all supporting documentation. File a separate Form 843 for each tax period and each type of tax; you cannot bundle multiple years onto one form.10Internal Revenue Service. Instructions for Form 843 Interest abatement requests use the same form. Mail everything to the IRS service center where the original return was filed. Processing runs anywhere from six weeks to six months.
Deadlines You Can’t Miss
If you already paid the penalty and want a refund, you must file your claim by the later of three years from the date you filed the return or two years from the date you paid the tax.11Internal Revenue Service. Time You Can Claim a Credit or Refund Miss that window and the money is gone no matter how strong your case is. If the penalty is still outstanding, you can request abatement at any time, but interest keeps compounding every day you wait.
If the IRS Says No
A denial is not the end. The rejection letter will explain the reasons and outline your appeal rights.12Internal Revenue Service. Penalty Appeal You can request a conference with the IRS Independent Office of Appeals, which gives you an independent review by someone who wasn’t involved in the original decision.13Internal Revenue Service. Appeals Appeals officers have broad authority to settle cases and often reach different outcomes than the initial reviewer.
If Appeals also denies relief, the final option is the U.S. Tax Court. For deficiency cases, you have 90 days from the date the IRS mails a statutory notice of deficiency to file a petition.14United States Tax Court. Guidance for Petitioners: Starting A Case That deadline is absolute; the Tax Court cannot extend it. For interest abatement specifically, the Tax Court has jurisdiction to review whether the IRS abused its discretion in denying your request.
When to Pay for Help
Most First Time Abatement requests are straightforward enough to handle yourself. Professional help earns its fee in reasonable cause cases with significant dollar amounts, accuracy-related penalty disputes involving complex tax positions, and interest abatement claims that require reconstructing a years-long timeline of IRS delays. Tax attorneys typically charge between $200 and $600 per hour, with rates exceeding $1,000 in major metropolitan areas. Enrolled agents and CPAs who specialize in IRS representation are generally less expensive, and some practitioners handle penalty abatement on a flat-fee basis.
The math is simple. If the penalty plus accrued interest runs into the thousands, representation can pay for itself many times over. If you’re staring at a $300 penalty on a single late return and your three prior years are clean, pick up the phone.