First Time Penalty Abatement

Penalties for Failure to File, Failure to Pay, or Failure to Deposit can hike up your tax bill by another 25%. But there’s a way to get these penalties reversed! It’s called the First Time Penalty Abatement, or FTA for short.

Do I Qualify for the Penalty Abatement?

1. To request the Penalty Abatement, you must currently be in “compliance.”  You are considered to be in compliance when all your returns have been filed and all your current-year estimated and withholding taxes have been paid.
2. Your record must not show previous penalty assessments for the past three tax years.

How to Request the Penalty Abatement

• If you have not yet paid the penalty, contact the IRS by phone and ask for the abatement. You can also request it in writing by typing up and mailing a statement requesting the abatement.
• File Form 843 requesting a money refund if the penalty was paid in the last 3 years.

Watch for These Penalty Abatement Glitches

The First Penalty Abatement is automatically approved if you meet the qualifications. However, there can be a glitch. The IRS uses an automated process called the “Reasonable Cause Assistant” (RCA for short) to determine if you qualify. Your chances that this software will return the correct answer is about 50-50. This means you’ll have to work with the IRS employees to fix whatever record-keeping problem is resulting in the wrong answer.

If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please get in touch with Tax Representative Jim Payne, CPA, by email or phone at (352) 317-5692.