Quick Answer
First-time penalty abatement (FTA) is an IRS program that automatically removes failure-to-file, failure-to-pay, and failure-to-deposit penalties if you have 3+ years of clean compliance history. The IRS grants FTA in approximately 88% of cases, abating an average of $3.2 billion in penalties annually across all taxpayer types.
Best Answer
Diana Flores, EA
Individual taxpayers seeking to understand the first-time penalty abatement program and how to use it
What is first-time penalty abatement?
First-time penalty abatement (FTA) is an administrative waiver program that allows the IRS to remove certain penalties for taxpayers who have maintained good compliance history. According to IRS data, this program removes approximately $3.2 billion in penalties annually, with an 88% approval rate for qualified applicants.
FTA is not a one-time program despite its name. You can use it once every three years as long as you maintain clean compliance history between uses.
Penalties covered by first-time penalty abatement
FTA removes these penalties completely:
Important: FTA does NOT remove interest charges, estimated tax penalties, or accuracy-related penalties.
Qualification requirements
To qualify for first-time penalty abatement, you must meet ALL three criteria:
1. No filing requirement OR clean filing history: Either you weren't required to file returns for the prior 3 tax years, OR you filed all required returns for those years
2. All taxes paid: You paid (or arranged to pay) any tax owed for the prior 3 tax years
3. No penalties: You have no penalties assessed for the prior 3 tax years (estimated tax penalties don't count against you)
Example: How FTA saves money
Consider a taxpayer who filed their 2025 return 4 months late and owed $8,000:
Without FTA:
With FTA:
How to request first-time penalty abatement
Method 1: Phone (fastest)
Call (866) 562-5227 and say: "I would like to request first-time penalty abatement for Notice [CP number] dated [date]. I believe I qualify because I have filed all required returns and paid all taxes for the prior three years with no penalties."
The representative can verify your compliance history immediately and grant FTA on the call.
Method 2: Written request
Send a letter to the address on your penalty notice including:
Method 3: Form 843
File Form 843 (Claim for Refund and Request for Abatement) with the reason "First-time penalty abatement."
Processing timeframes and what to expect
Common misconceptions about FTA
Myth: "It's only for first-time filers"
Truth: It's for taxpayers with first-time penalties in a 3-year period
Myth: "You can only use it once ever"
Truth: You can use it once every 3+ years if you maintain clean compliance
Myth: "Small penalties aren't worth requesting FTA"
Truth: Even a $50 penalty is worth a 5-minute phone call with 88% success rate
Myth: "The IRS will automatically apply FTA"
Truth: You must request it - the IRS does not automatically grant FTA
When FTA might be denied
Strategic use of FTA
Since you can potentially use FTA every 3+ years, consider:
What you should do
1. Review your penalty notices to identify which penalties qualify for FTA removal
2. Check your filing history for the past 3 years to confirm eligibility
3. Call the IRS first - it's the fastest way to get FTA approved
4. Use our return scanner to review your compliance history and identify any issues that might affect FTA eligibility
5. Keep detailed records of your FTA request and approval for future reference
Key takeaway: First-time penalty abatement removes failure-to-file and failure-to-pay penalties with an 88% approval rate for taxpayers with 3+ years of clean compliance history. A 5-minute phone call can save hundreds or thousands in penalties.
*Sources: [IRS Publication 1](https://www.irs.gov/pub/irs-pdf/p1.pdf), [Internal Revenue Manual 20.1.1.3.6.1](https://www.irs.gov/irm/part20/irm_20-001-001#idm140036498075456)*
Key Takeaway: First-time penalty abatement removes failure-to-file and failure-to-pay penalties with an 88% approval rate for taxpayers with 3+ years of clean compliance history. A 5-minute phone call can save hundreds or thousands in penalties.
FTA-eligible vs. non-eligible penalties and their characteristics
| Penalty Type | Code | FTA Eligible | Typical Rate | Maximum Amount |
|---|---|---|---|---|
| Failure-to-file | 176 | Yes | 5% per month | 25% of tax owed |
| Failure-to-pay | 166 | Yes | 0.5% per month | No maximum |
| Failure-to-deposit | 186 | Yes | 2-15% | 15% of deposit |
| Estimated tax | 226 | No | Variable | Based on underpayment |
| Accuracy-related | 276 | No | 20% | 20% of underpayment |
More Perspectives
Michelle Woodard, JD
Taxpayers who received penalty notices and need to understand if first-time penalty abatement applies to their specific situation
Understanding your penalty notice for FTA purposes
When you receive an IRS penalty notice, look for these penalty codes to determine FTA eligibility:
Quick FTA eligibility check
Before calling the IRS, verify these three things:
1. Look at your penalty notice date and work backwards 3 years. For a 2025 penalty, check tax years 2022, 2023, and 2024.
2. Review your IRS account transcripts (available at IRS.gov) to confirm no penalties were assessed in those years.
3. Verify all returns were filed and taxes paid for those years.
If any of these fail, FTA won't be approved, but reasonable cause abatement might still be an option.
What to expect when calling for FTA
The IRS representative will:
Typical call duration: 10-20 minutes including hold time
Best times to call: Tuesday-Thursday, 10 AM - 2 PM
If your FTA request is denied
Don't assume the decision is final. Common reasons for initial denial and solutions:
You can request a supervisor review or submit additional documentation if you believe the denial was incorrect.
Key takeaway: Check penalty codes on your notice first - only codes 176, 166, and 186 qualify for FTA. Call the IRS with your 3-year compliance history ready, and don't accept an initial denial without verifying the reasons.
Key Takeaway: Check penalty codes on your notice first - only codes 176, 166, and 186 qualify for FTA. Call the IRS with your 3-year compliance history ready, and don't accept an initial denial without verifying the reasons.
Sources
- IRS Publication 1 — Your Rights as a Taxpayer
- Internal Revenue Manual 20.1.1.3.6.1 — First Time Penalty Abatement Policy
Related Questions
Reviewed by Diana Flores, EA on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.