Common Reasons the IRS Waives Penalties
The IRS will waive penalties in some situations – namely, if you have reasonable cause or a history of compliance over the last three years. However, the agency will only waive certain penalties. Generally, you can get failure to file, failure to pay, and failure to deposit penalties waived, and sometimes even accuracy or civil fraud penalties. But, the IRS is typically not willing to waive other penalties.
The following sections look at the most common reasons the IRS waives penalties, along with examples and case studies from real taxpayers. To get help with IRS penalties or state tax penalties, use TaxCure to find a quality tax professional today.
Key takeaways
- IRS penalties – assessed for filing late, paying late, or making accuracy-related or fraudulent statements on tax returns.
- Waivers – the IRS offers administrative waivers for first-time penalties or when there's reasonable cause.
- Penalty relief – sometimes, the IRS offers blanket relief to a group of taxpayers, but usually, you need to ask for penalty waivers.
- How to apply – contact the IRS over the phone, file Form 843, write a letter requesting abatement, or hire a tax pro.
Most Common Reasons for IRS Penalty Waivers
The most common reasons for IRS penalty waivers are:
Summary of IRS Penalty Waiver Types
| Penalty Relief Type | Basis for Relief | Common Use Cases | Form or Method Used |
|---|---|---|---|
| First-Time Abatement (FTA) | Clean 3-year compliance history | First-time late filing or payment penalties | Phone, Form 843, IRS Letter |
| Reasonable Cause | Uncontrollable life events or good faith effort | Illness, death, natural disasters, lost records | Form 843 with written explanation |
| Statutory Exception | Error by IRS or legal exclusion | IRS written advice, disaster zones, combat service | Form 843 citing tax code or IRS guidance |
| Administrative Waiver | IRS-wide relief or special announcement | FEMA-declared disasters, COVID relief, etc. | Automatic or IRS announcement instructions |
- First-time penalty abatement – granted to taxpayers who have not incurred penalties for the last three filing periods.
- Reasonable cause penalty abatement – granted to taxpayers who had reasonable cause, such as a death or natural disaster, for filing or paying late.
Both first-time penalty abatement and reasonable cause penalty abatement are administrative penalty waivers. The IRS may also waive penalties due to erroneous written advice (under the terms of statutory exceptions) from the IRS, but that's less common. Within each of these categories, there are several different reasons why your penalties may be abated, as explored in the examples below.
Reasonable Cause Examples for IRS Penalty Abatement
| Reason Category | Specific Example | Likelihood of Approval | Supporting Docs Needed |
|---|---|---|---|
| Serious Illness or Death | Hospitalized or lost a spouse near tax deadline | High (if tied to dates) | Death certificate, medical records |
| Natural Disaster | Fire, flood, hurricane destroys records | High | Insurance claim, FEMA letter |
| Recordkeeping Challenges | Accountant died suddenly | Medium | Proof of engagement, obituary |
| Erroneous Advice | IRS provided wrong written info | Rare | IRS letter/email proof |
| Foreign Tax Form Penalty | Late Form 3520 based on pro’s bad advice | Medium | Letter from tax pro, Form 843 |
Realistic Scenarios: Penalty Removal or Penalty Waiver Denials
When applying for penalty relief, it's important to understand the IRS's rules on the penalty you want abated. It's also critical to work with a tax pro who has experience with penalty abatement. Tax professionals focus on different aspects of the tax law, and unfortunately, your main accountant or the first pro you find may not have the experience you need.
TaxCure can help you find a pro with the right experience – here's how to use this site.
Penalty relief for first-time oversight
You can get first-time abatement once every four years – basically, if you are compliant for the last three filing periods, you can get abatement for the next tax year, but you can only get first-time abatement on a single year of returns. If you have penalties over multiple tax periods, you can only use the first-time abatement on one of them.
For example, when this Reddit user incurred penalties for two tax years, commenters urged him to apply for first-time abatement on the first year of penalties and if possible, reasonable cause penalty relief for the second year.
The original poster said that they had incurred $50,000 in penalties and interest due to filing two years of income tax returns late, and they were wondering if they could get penalty abatement. The poster also explained that they wanted to apply for penalty abatement on their own because they didn't want to pay their accountant's fees.
Other Reddit users chimed in and said that the OP would likely qualify for first-time abatement on the first tax year if they had a history of compliance, and that they could apply for reasonable cause abatement if they had reasonable cause for filing the second year late.
Penalty relief for serious illness or death
Under reasonable cause penalty relief, you can also get relief if you paid or filed late due to the death or serious illness of yourself, a close family member, or your tax preparer. However, the request must make sense to the IRS. Say, for example, that your tax preparer died suddenly in the middle of tax season – in that case, the IRS will likely grant you a late filing penalty waiver because it's understandable that it will take some time to get your records back and find a new preparer.
However, there's no guarantee. In the above Reddit story, the poster explained that the reason they filed two years of returns late is that their usual tax preparer died. Commenters urged the poster to apply for reasonable cause for the second year. However, it's very subjective whether or not the IRS will say yes – after all, by the time the second return was filed late, the poster had over a year, nearly two years, to find a new tax preparer.
It's also important to ensure the penalty is subject to this type of relief – for example, you generally cannot get a waiver for the Trust Fund Recovery Penalty (TFRP), which is incurred by individuals who are personally responsible for a business not paying payroll taxes.
Instead, with that penalty, the only way you can get out of it is to argue that you were not personally liable, and unfortunately, personal illness and even death often aren't enough to get you out of paying this penalty. Notably, in the case of the United States of America v. Charles L. Williams, DDS, the Fifth Circuit of Appeals judged that the defendant acted willfully and thus was liable for these penalties. That ruling was in spite of the defendant going through the death of his wife and severe personal health problems during the time period when the payroll taxes were not paid.
Penalty relief for reliance on erroneous advice from the IRS
The IRS will waive penalties if you incur a penalty due to erroneous written advice from the IRS; however, this is very rare, as the agency doesn't put advice in writing often. Unfortunately, you cannot qualify for relief if you receive incorrect oral advice from an IRS employee, and the IRS also says that they will not give penalty waivers based on erroneous advice from a tax professional.
However, if you get in that situation, you may want to request an abatement just in case you can get it approved. For instance, this Reddit user failed to report a $200,000 foreign gift. When he realized his mistake, he contacted a tax attorney who said that it wouldn't be a problem to file Form 3520 late. However, the IRS nearly always assesses penalties when this return is filed late, and the attorney made a clerical error that increased the penalties even more.
After getting the advice of other Reddit users and a second attorney, the poster decided to apply for reasonable cause penalty abatement. In other words, he thought that he acted with normal care but that the IRS should remove the penalties due to extenuating circumstances. Readers also said that he could consider bringing a civil malpractice suit against the attorney who filed his foreign gift tax form – but they cautioned that they would need to be handled separately from any penalty abatement requests to the IRS.
Natural disasters – penalty relief
If you're in a FEMA-declared disaster area, you almost always qualify for relief on late filing and late payment penalties. The IRS generally puts out press releases on who qualifies. For example, in 2025, the IRS announced that individuals and businesses in Kentucky would receive automatic penalty relief if they were affected by the severe storms in the area.
FEMA declared the entire state a disaster area related to these storms. The IRS said that all returns due from February 14th to November 3rd are now due on November 3rd and not subject to any late filing or payment fees. That includes all individual and business tax returns, return payments, and estimated quarterly payments.
However, if you're not in a federally declared disaster zone, you can likely still get relief if you are affected by this type of event. For example, if you experience a home flood or fire, you should apply for reasonable cause penalty relief.
Loss of tax records
You may also be able to get reasonable cause penalty relief if you lost your tax records and are unable to complete your return. This normally applies in cases of natural disasters or fires – it doesn't just apply in cases where you misplaced your records due to disorganization.
Reasons for Statutory Penalty Relief
As noted above, penalty waivers for erroneous IRS advice are classified as statutory penalty relief. Here are some of the other reasons you can get statutory relief:
- Mailed a return on time – the IRS will assess the penalty based on the date they opened your tax return. However, if you appeal the penalty and explain that your return was postmarked on time, they will not assess the penalty.
- Lived in a federal disaster area – although disasters are listed under reasonable cause and thus qualify for administrative relief, if you're in a federal disaster zone, your relief shifts into the statutory category and in most cases, becomes automatic.
- Were involved in military operations in a combat zone – you can also get penalty relief if you're in a combat zone and incur a penalty, or if you incur a penalty for a return that was filed late due to you being in a combat zone.
How to Apply for Penalty Relief
You can apply for penalty relief on your own, or work with an attorney who provides penalty relief services. You can request penalty relief by:
In all cases, you should explain the reason you're seeking relief. To strengthen your claim, note the part of the tax code that gives you the legal right to request relief.
Frequently Asked Questions (FAQs)
What qualifies as reasonable cause for penalty abatement?
Reasonable cause is often defined as death, illness, or disaster, but it goes beyond that, especially if you're dealing with accuracy-related or civil fraud penalties. In these cases, reasonable cause considers if you acted with care and prudence or if you were willfully negligent about the penalties.
How often can I request first-time penalty abatement?
First-time abatement is available about every four years. Although there are stories of IRS employees saying it's a once-in-a-lifetime offer, that is not true. If you were compliant for the last three filing periods, you can generally qualify for first-time abatement.
What if my penalty abatement request is denied?
If your penalty relief request is denied, you can appeal. Make sure you appeal by the deadline on the determination notice or within a short time after being denied on the phone. Consider working with a tax professional for the best results.
Does penalty abatement affect interest charges?
If you get penalties abated, the interest that was related to those penalties will also be removed. Aside from that, however, you cannot get interest abated unless you're getting relief due to erroneous IRS advice.
How long does the penalty abatement process take?
The review process can vary, but typically takes several weeks to a few months.
Get Help With IRS Penalties
To get help with IRS penalties, use TaxCure to find an experienced tax professional today. Or check out the linked guides to take a DIY approach to penalty waivers.