Penalty Abatement: How to Reduce IRS Penalties (and When You Can Qualify)

bdjfinancials
Jun 12
1 min read

IRS penalties can add up fast. In some cases, you may be able to reduce or remove penalties through penalty abatement—especially if you have a strong compliance history or a valid reason for the issue.

Common IRS penalties

Failure-to-file penalty
Failure-to-pay penalty
Accuracy-related penalties

Two common paths to penalty relief

First-Time Abatement (FTA): for taxpayers with a clean compliance history
Reasonable cause: for events outside your control (illness, disaster, records loss, etc.)

What improves your chances

Filing all required returns
Paying or arranging payment for the underlying tax
Providing clear documentation when needed

Why strategy matters

Penalty relief is often part of a broader resolution plan (payment plan, OIC, CNC). Choosing the right approach can reduce total cost and speed up resolution.