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Penalty Abatement — Question the Penalties Before You Pay Them

The IRS assesses penalties automatically when you file late, pay late, or underpay estimated taxes.

What most taxpayers don't know: many of these penalties can be removed if you know what to request and how to document it.

Penalties typically add 25-40% to your balance. On a $50,000 tax debt, that's $12,500-$20,000 in penalties that may be removable.

We don't assume you owe what the IRS says you owe. We review your penalty history and build cases for removal based on your specific facts.

Get a Penalty Review

Talk to an Enrolled Agent | See what penalties might be removable | No obligation

Types of IRS Penalties

Types of IRS Penalties

Failure to File Penalty

5% per month (up to 25%) for filing late. This is the most expensive penalty and the first one to attack.

Failure to Pay Penalty

0.5% per month (up to 25%) for paying late. Assessed from the original due date until the balance is paid.

Accuracy-Related Penalty

20% penalty for substantial understatement of tax or negligence. Applied when the IRS believes you were careless or intentionally understated income.

Estimated Tax Penalty

Assessed when you didn't pay enough estimated tax throughout the year. Common for self-employed taxpayers, gig workers, and those with investment income.

If you have a clean compliance history, you may qualify for administrative relief:

Eligibility requirements

  • No penalties assessed in the prior three years

  • All required returns filed (or extensions properly filed)

  • Current on payment or have a payment arrangement

What it removes Failure to File, Failure to Pay, and Failure to Deposit penalties. Does not remove accuracy-related penalties or fraud penalties.

How to request it FTA is administrative relief. The IRS can grant it without requiring detailed explanation. Many taxpayers qualify but never request it because they don't know it exists.

One-time benefit Once you use FTA, you must maintain three years of clean compliance before qualifying again.

First-Time Penalty Abatement (FTA)

Reasonable Cause Penalty Relief

Reasonable Cause Penalty Relief

If you don't qualify for FTA or need to remove additional penalties, reasonable cause relief may apply.

What qualifies as reasonable cause

  • - Serious illness or death in the family
  • - Natural disaster or fire
  • - Unable to obtain records despite reasonable efforts
  • - Incorrect IRS advice
  • - Unavoidable absence
  • - Other circumstances beyond your control

What doesn't qualify

  • - Forgot to file
  • - Didn't have money to pay
  • - Relied on someone else to handle it
  • - Didn't understand the law
  • - General financial hardship

Documentation Required

Medical records, death certificates, insurance claims, correspondence showing reasonable efforts, third-party statements. The IRS wants proof, not explanations.

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Understanding IRS Penalty Abatement

IRS Penalty Relief Guide

Navigating Your Options for Penalty Abatement

Statutory Exceptions

The law provides specific situations where penalty relief is granted. Understanding these can be your first step toward a resolution.

Erroneous IRS Advice

If you relied on incorrect written advice from the IRS, penalties can be removed. This requires thorough documentation of the IRS advice and your subsequent reliance on it.

IRS Error or Delay

Relief may be available if an IRS-caused delay in processing resulted in penalties. This is common with amended returns or correspondence the IRS has lost.

Undue Hardship

For failure-to-pay penalties, relief is possible if paying would cause significant economic hardship beyond general financial difficulty. This has a high bar to meet but is available in extreme circumstances.

How We Evaluate Your Penalty Relief Options

  • Compliance History Review

    We immediately check your filing and payment history for the past three years to determine FTA eligibility.

  • Penalty Type Analysis

    Different penalties have different removal strategies. We identify which penalties are present and which paths apply.

  • Documentation Assessment

    If reasonable cause applies, we determine what documentation exists and what additional support is needed.

What We Include in Penalty Abatement Requests

Complete Penalty History

We obtain transcripts showing every penalty assessed, its date, and the related tax year.

FTA Qualification Statement

If you qualify, we lead with this and document your clean compliance history.

Reasonable Cause Narrative

We build a detailed timeline showing what happened and why it prevented timely compliance.

Supporting Documentation

Medical records, death certificates, business records, and third-party statements are crucial.

Specific Penalty Identification

We specify which penalties we're requesting removal for, the tax periods, and the relief provision that applies.

Tax Consultation Section

Start with a Penalty Analysis

Before you pay penalties, find out which ones might be removable. We'll review your penalty assessment history, evaluate your eligibility for relief, and tell you whether penalty abatement is worth pursuing.

Speak directly with a licensed Enrolled Agent who can review your penalty situation. Confidential. No obligation.

Disclaimer

Disclaimer

Penalty abatement is not guaranteed and depends on your specific circumstances and documentation. The IRS has discretion in granting relief. We evaluate your eligibility honestly and don't pursue penalty abatement requests that are unlikely to succeed.

Contact us.

📧 info@simonsgroup.net
📞 (202) 495-1404

📍 Serving all of New York — NYC, Brooklyn, Buffalo, Rochester, Albany, and surrounding areas