What FTA Covers
FTA can abate the failure-to-file penalty, failure-to-pay penalty, and failure-to-deposit penalty (for businesses). It applies to the first year you had a penalty. FTA does not abate interest—only penalties. It is a one-time relief; you generally cannot use it again once you've received it. FTA is an administrative waiver, meaning the IRS has discretion to grant it when you meet the criteria.
Qualification Requirements
You must have a clean compliance history for the 3 tax years prior to the year with the penalty. "Clean" means: (1) no penalties (or all prior penalties were abated), (2) all required returns were filed, and (3) all taxes were paid or you had an arrangement to pay. You must have filed the return for the year you're requesting abatement (or filed it by the time you request). You must have paid or arranged to pay the tax. The IRS will verify your compliance history before granting FTA.
How to Request FTA
Request FTA in writing or by phone. You can include it with your tax return, respond to a notice, or send a separate letter. Reference "First-Time Penalty Abatement" or "FTA" and the tax year(s). You can also use Form 843, Claim for Refund and Request for Abatement, for a formal request. If you're working with a tax professional, they can request it on your behalf. The IRS typically processes FTA requests within a few weeks.
FTA vs. Reasonable Cause
FTA is for taxpayers who meet the compliance criteria regardless of why the penalty was assessed. Reasonable cause abatement is for taxpayers who have a valid reason (e.g., illness, disaster, death) for the failure. You can request both—if the IRS denies FTA, they may still grant reasonable cause. If you don't qualify for FTA, you may still qualify for reasonable cause abatement if you have documentation supporting your circumstances.
