A plain-English guide to the IRS’s new automatic penalty relief, the reasonable cause standard, and how to request abatement on penalties that don’t qualify on their own.
Failure-to-file and failure-to-pay penalties can pile up fast, and most people don’t realize how much of that can actually be reduced or removed. Here’s what usually gets missed:
The IRS now removes many first-time penalties automatically, but if your notice doesn’t mention it, nothing happens on its own.
It has a specific legal standard, and the IRS explicitly rejects excuses like “I didn’t know” or “my preparer missed it.”
Removing a penalty can reduce the interest charged on it, but interest on the underlying tax itself generally still applies.
A Real Path to Reducing What You Owe, Not Just a Form to Fill Out
Starting with 2025 tax-year returns, the IRS now automatically removes Failure-to-File, Failure-to-Pay, and Failure-to-Deposit penalties for taxpayers with a clean 3-year filing and payment history, no request required. If you qualify, the IRS mails a notice confirming the relief on its own.
Automatic relief doesn’t cover every situation — older penalty years, other penalty types, or a compliance history that doesn’t quite qualify. In those cases, you (or someone with a signed Power of Attorney) request relief by phone or with Form 843, in writing.
Reasonable cause means you tried to comply with the tax law but couldn’t, due to circumstances beyond your control — evaluated case by case on the actual facts. It’s a real legal standard, not just a sympathetic story.
We check whether you already qualify for automatic relief, and if not, we build the reasonable cause case or file Form 843 with the documentation the IRS actually asks for. If penalties are tied to a bigger IRS problem, see our IRS & Tax Problem Resolution service.
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$1 million" figure since it does the heavy lifting that "peace of mind" only implies—tighter, more credible, and concrete.
New for 2025+ returns: if your compliance history qualifies, the IRS removes the penalty on its own and mails a notice confirming it. Nothing to request.
For situations automatic relief doesn’t cover: circumstances beyond your control, requested by phone or Form 843 with documentation.
A narrow legal exemption that applies only when a specific IRC provision covers your exact situation, less common than the other two.
Clean filing & payment history required to qualify for automatic relief
Tax years the new automatic relief program applies to
Lookback window used instead of 3 years for quarterly filers
What you file to request abatement on penalties already assessed or paid
I’m just like the creators I work with —
I understand the mix of freedom and chaos that comes with a global lifestyle. My goal is to make bookkeeping and taxes simple, clear, and stress-free so you can focus on what you do best.
– Cameron Botes, Founder & Tax Advisor
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Still have questions about penalty abatement? Here’s what we get asked the most.
No. If you have a clean 3-year filing and payment history (or 12 consecutive quarters for quarterly filers), the IRS now removes qualifying Failure-to-File, Failure-to-Pay, and Failure-to-Deposit penalties on its own and mails you a notice confirming it — you don’t need to call or file anything.
First-Time Abatement used the same core eligibility rules, but you had to proactively call the IRS or write in to request it. The new automatic program applies that same relief without you needing to contact the IRS at all, for eligible 2025-and-later returns.
Only three: Failure to File, Failure to Pay, and Failure to Deposit. Accuracy-related penalties and the estimated tax penalty are not covered, and generally need a different kind of relief request.
Reasonable cause means you tried to comply but couldn’t due to circumstances beyond your control — things like a death or serious illness in the family, a natural disaster, being unable to get the records you needed, or a system issue that delayed a timely filing. It’s decided case by case on the actual facts, not on general excuses.
Not entirely. Interest charged on the underlying tax itself generally still applies. What usually changes is the interest that had been accruing on the penalty amount — once the penalty is removed, that portion goes with it.
Form 843 is the written claim you file to request a refund or abatement of a penalty you’ve already been charged or already paid, for situations that a phone request doesn’t resolve. It has to be filed within 3 years of when you filed the original return, or 2 years of when you paid the tax, whichever is later.
Often, yes. If you qualify under the same rules (automatic relief criteria or reasonable cause), you can file Form 843 as a claim for refund, as long as you’re within that 3-year/2-year filing window.
Your denial notice will outline the Penalty Appeal process, which gives you a formal path to challenge the decision. See our IRS & Tax Problem Resolution service if the situation has grown beyond a single penalty.
