Everything You Need to Know About the IRS First-Time Penalty Abatement Waiver

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You didn’t file or pay your taxes on time, and now you’re panicking. Late taxes can prompt harsh penalties from the IRS — but it might not be so bad if you typically pay on time. The IRS offers a penalty abatement waiver to select taxpayers; read on to learn more:

What Is the First-Time Penalty Abatement Waiver?

The first-time penalty abatement waiver provides relief to those who fail to file or pay their taxes on time. The waiver is also available to employers who fail to deposit payroll taxes. Specific criteria must be met to qualify, but for typically compliant taxpayers, this may be the safest path to avoiding typical late payment consequences.

Who Qualifies For Abatement?

As the name indicates, this waiver is only available to those with a clear track record of paying their taxes on time. To qualify, you need a clean tax-paying history for at least three years. Gray area exists, however; the IRS mandates no significant penalties in the last several years but never actually defines ‘significant.’ Additionally, the estimated tax penalty is listed as an exception — if you’ve struggled to pay quarterly taxes, you might still qualify for penalty abatement.

Requesting the FTA Waiver

The IRS provides several available methods for requesting the FTA waiver. Options include e-services, phone requests, and written applications. Given the complications involved in qualifying for the waiver, many taxpayers apply with assistance from tax experts, who can minimize the potential for disqualification on the basis of a history of noncompliance.

Qualifying for the first-time penalty abatement waiver can be surprisingly tricky, so it’s best to seek assistance from an expert. Work with the Highland Tax Group to improve your chances of securing penalty relief.