How Do I Get My Tax Penalty Waived? - IRS Penalty Abatement

April 26, 2024 by Charla Suaste
Tax Penalty

There are many different types of IRS penalties. There are trust fund penalties, failure to deposit penalties, failure to file penalties, failure to pay penalties, fraud penalties, accuracy-related penalties, and more.

In this blog, we are focusing on penalties that can be assessed on individuals – primarily, the failure to file, failure to pay, and accuracy-related penalties. Let’s discuss these penalties and what they look like below.

  • IRS failure to file penalty
    This penalty is assessed when a tax return is not filed by either the April 15th due date or by the extended due date in the case of an extension. This is generally October 15 for individuals. The penalty is assessed at 5% of the unpaid taxes for each month or part of the month that the return is late. It maxes out at 25%, which means that it will not continue to grow after five months.*
  • IRS failure to pay penalty
    This penalty is also assessed when the balance due on a return is not paid by the April 15th due date. Please note that even if you request an extension, the IRS will assess this penalty as they expect you to pay the tax due when you request the extension. Additionally, this penalty is assessed at the rate of 0.5% of the unpaid taxes for each month or part of the month where they remain unpaid. It also maxes out at 25%. This penalty is offset by the failure to pay penalty if they are both assessed in the same month.*

    *The total max for the failure to file and failure to pay penalty combined is 47.5% due to this offset.
  • Accuracy-related penalty
    This penalty is generally assessed during an audit if there is an understatement of tax on your tax return and if the understatement is 10% or $5,000 (whichever is less) of the total tax liability. This penalty is assessed at a flat rate of 20% of the total additional tax liability assessed in the audit.

As you can see, IRS penalties can, unfortunately, add up very quickly, so trying to get them waived can save you some considerable money.


Where should I start?

If you can show that there was “reasonable” cause for the understatement or for failure to file or pay on time, you may be able to get those penalties abated.

The IRS also has a policy of first-time abatement for failure to file or failure to pay penalties if you can show that you have a good compliance record and it is the first time that you are requesting this penalty abatement. While it is important to note that it is not codified in the Internal Revenue Code, it is a policy that the IRS has generally adhered to, which is also available to you as an individual. This is the easiest way to get these two penalties waived.

What do we mean by “Reasonable Cause”?

To show reasonable cause, the IRS will want to see all the facts and circumstances surrounding the late filing, the late payment, or the understatement of the tax. Reasonable cause could be:


  • Reasonable reliance on a tax professional; however, you must show that you provided the tax professional with all relevant information and that you followed their advice (and that they were competent to give that advice);
  • Long-term serious illness when the filing or payment was due or
  • Reasonable reliance on either a tax court case or revenue procedure for the position that you took on the tax return.

How do I request a penalty abatement?

Penalty abatement is generally requested using IRS Form 843, Claim for Refund, and Request for Abatement. You can fax or mail this request to the IRS, who will then review your request and determine whether you qualify. If they disagree with your request, you will receive a notice in the mail, but an adverse determination can always be appealed. These appeals can be petitioned all the way to Tax Court if necessary. If you already paid the amount due, you can file a refund suit in District Court.

Back in 2020, the Appeals Court Circuits came out with a case that stated that, for office audits, supervisory approval is needed for an accuracy-related penalty to be assessed. So, if there was no supervisory approval and the IRS examiner acted alone in assessing the penalty, it can be argued that the penalty should be removed during the appeals or petition process.

This is just a brief overview of how to waive a few tax penalties. If you would like more information or assistance with this process, TaxAudit’s Tax Debt Relief team may be a great resource for you. We offer free, no-obligation consultations and can help offer you a solution to resolving your tax debt. We may even be able to represent you to the IRS, so you don’t have to. For more information, please give us a call at 800.922.8348 or click here, and we’ll be happy to help you.

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Charla Suaste
Communications Content Developer


Charla Suaste joined TaxAudit back in 2007 and, over the past 14 years, she has worked in a variety of different roles throughout the organization, including as a Customer Service Representative, Case Coordinator, and Administrative Services Assistant. She now serves as the Communications Content Developer and is passionate about writing, editing, and making even the most complex concepts easy to understand. Outside of work, Charla enjoys traveling, listening to podcasts, and spending time in her garden.


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