- Administrative relief via FTA or AEP requires a three-year timely compliance history for the same return type and is limited to failure-to-file, failure-to-pay, and failure-to-deposit penalties.
- AEP starts in summer 2026 for 2025 tax year returns and subsequent 2026 quarterly returns, applied automatically with no taxpayer action or initial penalty assessment.
- Reasonable cause relief considers specific events like disasters or illness that prevented timely compliance despite ordinary care, and is requested with supporting documentation.
- Interest tied to any reduced or removed penalty is automatically adjusted, but the underlying tax remains due.
For background on this issue, read our Penalty relief guide.
Administrative Penalty Relief
The IRS grants administrative relief from certain penalties through formal communications such as policy statements, news releases, or notices. These announcements specify the affected return type, tax period, and penalty.
First Time Abate has been the most common form of this relief. It applies to individuals and businesses with a three-year history of timely filing and paying for the same return type. Taxpayers must contact the IRS by phone or submit a written request or Form 843. The IRS reviews account records without requiring specific mention of the relief or supporting documents.
Beginning in summer 2026, Automatic Exemption from Penalty will apply to 2025 tax year returns and subsequent periods as well as 2026 quarterly returns and subsequent. Eligible forms include 1040, 1065, 1120, 940, 941, 943, 944, 945, and CT-1. If prior compliance is shown, the IRS does not assess failure-to-file, failure-to-pay, or failure-to-deposit penalties and sends a notice explaining the relief.
Qualifying for AEP or FTA
Both programs require the same return type to have been timely filed for the prior three years, or 12 consecutive quarters for quarterly filers. Penalties assessed in that period must have been abated for reasonable cause or IRS error, with no estimated tax penalty exception applying to the history check.
Business taxpayers have additional requirements: the failure-to-deposit penalty must not have been waived four or more times in the prior period, and it must not have been charged for Electronic Federal Tax Payment System avoidance.
These forms of relief do not apply to returns filed once or infrequently, the daily delinquency penalty, or information reporting dependent on another filing. Taxpayers remain liable for any unpaid tax, interest, or other penalties not covered.
Reasonable Cause Relief
When administrative relief is not available, taxpayers may request penalty relief based on reasonable cause. The IRS determines eligibility case by case after considering all facts and circumstances.
For failure-to-file or failure-to-pay penalties, relief may apply if the taxpayer exercised ordinary care and prudence but was unable to meet the deadline. Examples include fires, natural disasters, death or serious illness in the immediate family, or IRS system issues that delayed electronic filing.
Factors that generally do not qualify include reliance on a tax professional, lack of knowledge, ordinary mistakes, or lack of funds by itself. Accuracy-related and information-return penalties have separate standards that weigh efforts to comply, tax complexity, and mitigating factors.
Requesting Relief and Interest Effects
Taxpayers can request reasonable cause relief by calling the toll-free number on their notice and providing supporting documentation. If not approved by phone, they may file Form 843 with a written explanation of what happened, how it prevented compliance, and steps taken to correct the issue.
The IRS automatically reduces or removes interest related to any penalty that is reduced or removed, whether through administrative relief or reasonable cause.
Republic Tax Relief provides private tax-resolution services for individuals and businesses facing IRS or state tax issues and offers a free, no-obligation initial consultation to discuss suitability for its help communicating with the IRS.
IRS guidance checked .
General information only, not individual tax, legal, or financial advice. Rules, deadlines, and eligibility depend on your circumstances. Check current official guidance or consult a qualified professional.
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