First-Time Penalty Abatement (FTA) is the IRS’s clean-record waiver: if you filed and paid on time for the three years before a bad year, the IRS will remove that year’s late-filing and late-payment penalties on request — no excuse, no story, no documentation of hardship required. But the ground is shifting under this page’s topic. Starting in summer 2026, the IRS began replacing FTA with an automatic process — the Automatic Exemption from Penalty (AEP) — under which qualifying taxpayers never get the penalty in the first place (IRS News Release IR-2026-83, July 8, 2026). For returns with original due dates on or after January 1, 2027, FTA is gone and AEP is the system. This page explains both, because which one applies to you depends entirely on which tax period your penalty belongs to.
General tax information, not tax or legal advice. Penalty relief is discretionary unless a statutory test is met; your notice and account transcript control your case.
Under AEP, the IRS tests your compliance history systemically when it processes the return. If you qualify, the failure-to-file, failure-to-pay and failure-to-deposit penalties are simply not assessed — there is nothing to request — and the IRS issues a notice confirming the relief. The rollout:
If your penalty is on a 2025 return (or a 2026 quarterly return) and you had a clean three years before it, check your account before doing anything else: the relief may already be in motion, or one phone call may finish it (see the transition rules below).
The phase-out is not a cliff. The IRS has said that during the transition, some taxpayers who qualify for AEP may still receive penalty notices for tax year 2025 or 2026 quarterly returns — and those taxpayers may contact the IRS and request First Time Abate for those periods. So for 2025 and 2026-quarterly penalties, the practical rule is: automatic if the system caught it, requestable if it didn’t. For periods before 2025, nothing changed at all — classic FTA, requested the classic way. And for returns with original due dates on or after January 1, 2027, don’t ask for FTA: it no longer exists for those periods — check whether AEP already applied.
Whether the IRS applies the test automatically (AEP) or you ask (FTA), the underlying criteria are the same three:
| Self-check question | What qualifies |
|---|---|
| 1. Was your record clean for the 3 years before the penalty year? | No penalties in the preceding 3 years (one exception: an estimated tax penalty does not break eligibility), or you were not previously required to file |
| 2. Have you filed everything currently required? | You have filed — or filed a valid extension for — all currently required returns |
| 3. Have you paid, or arranged to pay, the tax due? | Paid in full, or in an arrangement such as an installment agreement in good standing |
Three details that decide real cases:
FTA — and now AEP — reach the three workhorse penalties: failure to file under §6651(a)(1) (mechanics on the failure-to-file page), failure to pay under §6651(a)(2)/(a)(3) (the failure-to-pay page), and failure to deposit under §6656, which is why employers should read the payroll penalties page too. One penalty is conspicuously absent: the estimated tax penalty is not covered — the flip side of the rule above that an estimated tax penalty doesn’t spoil your clean record either.
When a penalty is abated, the interest charged on that penalty is adjusted with it. Interest on the underlying tax is a separate question (and a much narrower one).
For periods where FTA still has to be requested, asking is deliberately light: you do not need to name FTA, tell a story, or attach documents — the IRS checks your account’s 3-year history itself, and a phone request is usually decided on the call. The channels, the word-for-word phone script, the Form 843 mechanics and the honest timelines live on the how-to-request page. Do that reading next if your penalty predates AEP or a transition-period notice reached you anyway.
A penalty inside the lookback window, or a second bad year, kills the clean-record route — it does not kill relief. The IRS considers relief in a set order (IRM 20.1.1.3): correction of IRS error, statutory exceptions, administrative waivers like FTA/AEP, and then reasonable cause — the facts-and-circumstances argument covered on the reasonable cause page. Two practical consequences: an agent who hears a reasonable-cause story is instructed to test FTA first, so always ask even if you have a story; and a written denial is not the end — it carries appeal rights, which the Form 12203 walkthrough walks through. If the problem is bigger than penalties — a balance you cannot pay at all — the Offer in Compromise explainer covers the larger relief paths. To size the penalty you’re trying to erase, run it through the IRS penalty calculator first.
What Is the IRS First-Time Penalty Abatement? An administrative waiver (IRM 20.1.1.3.3.2.1 — it is not in the tax Code) that removes failure-to-file, failure-to-pay and failure-to-deposit penalties for one tax period when you had a clean filing and payment record for the prior three years. From summer 2026 it is being replaced by the automatic AEP for newer periods: same test, but the IRS applies it without being asked.
What are the requirements for first-time penalty abatement? Three: (1) no penalties in the preceding 3 years (an estimated tax penalty doesn’t count against you) or no prior filing requirement; (2) you have filed, or validly extended, every return currently required; (3) you have paid any tax due or arranged to pay it — an installment agreement in good standing counts as arranged.
How do I request first-time penalty abatement? For periods where a request is still the route: by phone (number at the top right of your notice — most requests are decided on the call), by signed written statement, or on Form 843 if the penalty was already paid and you’re claiming a refund. Step-by-step channels, a phone script and timelines are on the how-to-request page. For tax year 2025 and later periods, first check whether the automatic AEP already applied.
Can first-time abatement remove more than one penalty / more than one year? More than one penalty type, yes — it can clear the failure-to-file, failure-to-pay and failure-to-deposit penalties stacked on the same period. More than one year, no: FTA applies to a single tax period. A second bad year needs its own argument, usually reasonable cause.
Do I need to pay the tax first to qualify? You must have paid the tax or arranged to pay it — an installment agreement in good standing satisfies the test, so full payment up front is not required. The waiver never touches the tax itself or interest on the tax; it removes penalties (and the interest that was charged on those penalties).
General tax information, not tax or legal advice. Sources: IRS News Release IR-2026-83 (July 8, 2026) introducing the Automatic Exemption from Penalty; IRM 20.1.1.3 and 20.1.1.3.3.2.1 (relief order and FTA criteria); IRS “Administrative Penalty Relief” and penalty relief pages; IRS Topic No. 653. Currency verified 2026-10-23.