One-Time Tax Abatement: Eligibility, Form 843, and Denials

A one-time tax abatement from the IRS is available through a program called First-Time Abate, which removes failure-to-file, failure-to-pay, and failure-to-deposit penalties for a single tax period if you’ve had a clean penalty record for the prior three years. You don’t need to prove hardship, illness, or any specific reason for the lapse. You just need to qualify and ask. Most people can get the penalty removed in a single phone call.

Which Penalties the Waiver Covers

First-Time Abate applies to three specific penalties:

Failure to file, charged at 5% of unpaid tax per month or partial month, capped at 25%.¹
Failure to pay, charged at 0.5% of unpaid tax per month, also capped at 25%. When both penalties hit the same month, the filing penalty is reduced by the payment penalty amount.²
Failure to deposit employment taxes, tiered from 2% up to 15% depending on how late the deposit is.³

The waiver also covers the failure-to-file penalties for partnership returns (IRC 6698) and S corporation returns (IRC 6699).⁴

What the Waiver Does Not Cover

Accuracy-related penalties, estimated tax penalties, and the daily delinquency penalty are all outside First-Time Abate. So are penalties tied to event-based returns you file only once or occasionally: estate tax returns (Form 706), gift tax returns (Form 709), exempt organization returns (Form 990), the 1099 series, and international information returns like Forms 3520, 5471, and 5472.⁴ If your penalty is on one of those, you need to pursue reasonable cause relief instead.

Who Qualifies

The IRS looks at three things.

Clean penalty history. You cannot have received any penalties on the same type of return during the three tax years before the year at issue. One nuance matters: a prior penalty that was removed for reasonable cause or another accepted reason doesn’t disqualify you. A prior penalty that was removed using First-Time Abate itself does.⁵

All required returns filed. Every return you were required to file must be filed, or covered by a valid extension. The IRS will not waive one year’s penalty while another year’s return is still missing.⁵

You do not have to pay the tax first. Many people think they need to zero out their balance before asking. They don’t. The IRS explicitly allows First-Time Abate requests when the underlying tax is still unpaid. Just be aware the failure-to-pay penalty keeps accruing on the remaining balance until it’s cleared.⁵

How to Ask

There are two ways to request the abatement.

By Phone

Call the toll-free number printed on your penalty notice. The representative can look up your account, verify your three-year compliance record, and remove the penalty during the call. There’s a limit: an IRS agent can grant oral relief only when the penalty is $25,000 or less per tax period. Above that threshold, you’ll be directed to submit a written request.⁴

By Written Request on Form 843

For larger penalties, or when you want documentation, use Form 843, Claim for Refund and Request for Abatement.⁶

Before you fill it out, pull the IRS notice that assessed the penalty. A CP14, CP161, or CP504 will show the tax period, the penalty amount, the notice number, and the Internal Revenue Code section for the penalty. You’ll reference all of those on the form.

The key entries, according to the current instructions:⁷

Line 3, the date the penalty was paid, if you already paid and want a refund.
Line 5, the return type (for example, 1040 for individual income tax).
Line 6, the Code section for the penalty. For a late-filing penalty, that’s 6651(a)(1).
Line 7, the box that matches your reason for the request.
Line 8, your explanation. State that you’re requesting First-Time Abate, confirm you’ve filed all required returns, and note your clean penalty history for the prior three years.

Mail the completed form to the service center address on your notice.

Refund Deadline if You Already Paid

If the penalty has already been paid and you want it back, the general refund clock applies: three years from the date the return was filed, or two years from the date the penalty was paid, whichever is later.⁸ If the penalty is still unpaid and sitting on your account, there is no hard deadline to request abatement, but interest keeps building until you do.

What Happens After the IRS Approves the Request

Two things happen. The penalty is removed from your account, and if you already paid it the IRS refunds the money or credits it toward another federal tax balance. Interest that had accrued on the penalty itself is also reduced or removed automatically.⁹

Interest on the underlying unpaid tax is a separate matter. It keeps running until the tax is paid, so clearing the balance quickly still saves money even after the penalty is gone.

When to Use First-Time Abate and When to Save It

First-Time Abate is a one-shot tool. Once you use it, the three-year clean-history clock resets before you can use it again. The IRS also offers reasonable cause relief, which applies when circumstances like serious illness, natural disaster, fire, inability to access records, or a system outage prevented timely filing or payment.¹⁰

If you have a strong reasonable cause argument for this penalty, such as documented hospitalization at the filing deadline, leading with that argument preserves your First-Time Abate for a future year when your justification might be thinner.

Watch this trap. If you call and ask for reasonable cause relief but your account also qualifies for First-Time Abate, the IRS applies First-Time Abate automatically and never evaluates the reasonable cause claim.¹⁰ The penalty still goes away, but you’ve spent your one-time waiver. If keeping First-Time Abate available matters to you, tell the representative up front that you want the request evaluated only under reasonable cause.

If the IRS Denies Your Request

A denial letter will explain your appeal rights. You generally have 30 days from the date of that letter to request a conference with the IRS Independent Office of Appeals.¹¹

You can only appeal after a written request has been formally denied. You cannot appeal a penalty you never asked the IRS to remove. Include supporting documentation with the appeal: cancelled checks if you’re arguing timely payment, or a written account of circumstances if you’re now pursuing reasonable cause. The specific deadline printed on your denial letter controls over the general 30-day guideline, so check it carefully.¹¹

1
Office of the Law Revision Counsel. 26 U.S. Code 6651 – Failure to File Tax Return or to Pay Tax
2
Internal Revenue Service. Failure to Pay Penalty
3
Office of the Law Revision Counsel. 26 USC 6656 – Failure to Make Deposit of Taxes
4
Internal Revenue Service. IRM 20.1.1 Introduction and Penalty Relief
5
Internal Revenue Service. Administrative Penalty Relief
6
Internal Revenue Service. About Form 843, Claim for Refund and Request for Abatement
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Internal Revenue Service. Instructions for Form 843
8
Office of the Law Revision Counsel. 26 USC 6511 – Limitations on Credit or Refund
9
Internal Revenue Service. Penalty Relief
10
Internal Revenue Service. Penalty Relief for Reasonable Cause
11
Internal Revenue Service. Penalty Appeal