Wait - I Can Do That? | Ep. 12: Ask the IRS to Remove a Late Penalty

If an IRS notice charges you a penalty for filing or paying late, one clean record can take it off. The penalties come from Internal Revenue Code section 6651, and the relief is an administrative waiver — First Time Abate. It is meant for a taxpayer with three years of timely compliance, meaning the same return type filed on time and any tax due paid, and the IRS checks your account for that itself. 1

If a notice still arrives with the penalty on it, call the number printed on that notice and ask. You do not have to name the waiver as the relief you want, and you do not have to send documents with the request.

Since summer 2026 the IRS has been replacing that request process with one it runs itself. Under the Automatic Exemption from Penalty, eligible taxpayers are not assessed a failure-to-file, failure-to-pay or failure-to-deposit penalty in the first place for 2025 tax year returns and 2026 quarterly returns, and the IRS sends a notice confirming the relief. The IRS says the automatic process replaces the waiver for eligible returns with original due dates on or after January 1, 2027. 2

That transition is why a penalty notice can still reach a taxpayer whose return was processed before the automatic process was in place. The Taxpayer Advocate Service's advice for that letter is not to ignore it: call the number on it and ask. In fiscal 2025 about 220,000 taxpayers received this relief by requesting it, and the Taxpayer Advocate Service estimates more than 1.5 million would have received it had the automatic process been running. 3

Either way, what comes off is the penalty and the interest charged on that penalty. The tax you still owe, and the interest charged on the tax, are yours to pay. 1

Verify with a professional for your jurisdiction.