Understanding First Time Penalty Abatement
The IRS offers a First Time Penalty Abatement (FTA) waiver to taxpayers who meet specific criteria. This relief can eliminate penalties for failing to file on time, failing to pay on time, or failing to deposit taxes as required. This provision offers a lifeline to those who have generally been compliant with tax laws but have encountered an unexpected situation leading to a penalty. Understanding the eligibility requirements and how to properly request abatement is crucial.
Eligibility for Penalty Abatement
To qualify for FTA, you generally need to demonstrate a clean compliance history. This means you must have filed all required returns for the past three years (or have a valid extension), paid (or arranged to pay) all taxes due, and haven’t had penalties abated previously. A strong argument emphasizing your prior compliance and explaining the circumstances that led to the current penalty will greatly increase your chances of approval. Clear and concise communication is key.
Crafting Your Abatement Request Letter
Your abatement request letter should be professional and clearly state the reasons for the penalty. Specifically address why you believe you meet the FTA criteria. Provide supporting documentation if possible, such as medical records, letters from employers, or other evidence of extenuating circumstances. The letter should include your name, address, Social Security Number (or Employer Identification Number), the tax year in question, the specific penalty you’re seeking abatement for, and a detailed explanation. Always keep a copy of the letter and any supporting documents for your records.
Submitting Your Request and Following Up
Submit your abatement request to the IRS address provided on your penalty notice. If you can’t find the address, consult the IRS website or call their customer service line. After submitting, allow sufficient time for processing (usually several weeks or months). If you haven’t received a response within a reasonable timeframe, follow up with the IRS to inquire about the status of your request. Be prepared to provide your case details and any tracking information.
22 First Time Penalty Abatement Letter Samples
Sample 1: Basic Abatement Request
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the [Penalty Type] penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN]. I filed [Tax Form Number] and incurred this penalty due to [Briefly Explain Reason].
I have a history of full compliance with my tax obligations. I have filed all required returns and paid all taxes due in the past three years. This penalty is an isolated incident, and I respectfully request that you consider waiving the penalty under the First Time Penalty Abatement policy.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 2: Abatement Request Due to Illness
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the [Penalty Type] penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN]. I filed [Tax Form Number] and incurred this penalty due to a sudden and severe illness that incapacitated me during the filing period.
I was diagnosed with [Illness Name] on [Date of Diagnosis] and was under medical care until [Date of Recovery]. Attached are copies of medical records from [Doctor’s Name/Hospital Name] as supporting documentation. Prior to this, I have consistently met all my tax obligations, filing all returns and paying all taxes on time.
Therefore, I respectfully request a waiver of the penalties under the First Time Penalty Abatement policy.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 3: Abatement Request Due to Death in Family
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the [Penalty Type] penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN]. The late filing and subsequent penalty were a direct result of the unexpected death of my [Relationship to Deceased] on [Date of Death].
I was responsible for handling the estate and related affairs, which consumed a significant amount of time and emotional energy. This unforeseen responsibility prevented me from completing my tax obligations within the prescribed timeframe. I have consistently met my tax obligations in the past, and I am attaching a copy of the death certificate as supporting documentation.
I respectfully request a waiver of the penalties under the First Time Penalty Abatement policy, considering these extenuating circumstances.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 4: Abatement Request Due to Natural Disaster
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the [Penalty Type] penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN]. The reason for the delay in filing and payment was directly due to [Name of Natural Disaster] which occurred on [Date of Disaster].
This disaster significantly impacted my ability to access records, conduct business, and ultimately meet the tax filing deadline. I was focused on ensuring the safety of my family and securing my property. I have always been compliant with tax laws, and this is an exceptional circumstance. I am attaching documentation (e.g., insurance claims, FEMA declarations) to support my claim.
I respectfully request a waiver of the penalties under the First Time Penalty Abatement policy given these circumstances.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 5: Abatement Request Due to Erroneous Advice
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the [Penalty Type] penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN]. I relied on advice from [Name of Advisor/Company] regarding the filing deadline/payment obligation and was subsequently penalized.
I believed the information provided was accurate, but I now understand that the advice was incorrect. I have since taken steps to correct the error and ensure future compliance. I am providing documentation (e.g., a letter from the advisor acknowledging the error) as supporting evidence. I have always been compliant in the past.
I respectfully request a waiver of the penalties under the First Time Penalty Abatement policy, as I acted in good faith based on professional advice.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 6: More Detailed Explanation of FTA Eligibility
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN]. I believe I am eligible for FTA because I meet the required criteria.
Specifically, I have filed all required tax returns for the past three years, including any extensions. I have also paid, or arranged to pay, all taxes owed. Finally, I have not previously been granted an abatement of penalties under the FTA program.
The penalty was incurred due to [Briefly Explain Reason]. I respectfully request that you waive the penalty.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 7: Request with Payment Plan Details
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN].
While I was unable to pay the full amount of taxes due by the original deadline, I have since established a payment plan with the IRS. The agreement number is [Payment Plan Agreement Number]. I am current with my payments under this plan.
The penalty was incurred due to [Briefly Explain Reason]. I believe I am otherwise eligible for FTA and respectfully request that you waive the penalty.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 8: Emphasis on Good Faith Effort
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN].
Although a penalty was assessed, I want to emphasize that I made a good faith effort to comply with my tax obligations. [Explain the steps you took, even if they were ultimately unsuccessful].
The penalty was incurred due to [Briefly Explain Reason, linking it to the good faith effort]. I believe I am otherwise eligible for FTA and respectfully request that you waive the penalty.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 9: Specific Reference to IRS Publication 1
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN].
As outlined in IRS Publication 1, Your Rights as a Taxpayer, taxpayers who meet certain criteria may be eligible for penalty relief. I believe I meet these criteria, as I have filed all returns and paid all taxes due for the past three years (or have a valid extension), and have not previously received penalty abatement under the First Time Penalty Abatement policy.
The penalty was incurred due to [Briefly Explain Reason]. I respectfully request that you waive the penalty under the FTA guidelines.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 10: Business – COVID Related Hardship
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Employer Identification Number (EIN) is [Your EIN]. My business, [Business Name], experienced significant financial hardship due to the COVID-19 pandemic.
The pandemic resulted in [Explain Specific Impact, e.g., loss of customers, supply chain disruptions, mandated closures]. This severely impacted our cash flow and ability to meet all financial obligations, including timely tax payments. We have since recovered and are now current with all tax filings and payments.
I respectfully request that you consider these circumstances and waive the penalty. We believe we are otherwise eligible for FTA due to our prior history of compliance.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name/Title]
Sample 11: Lost or Destroyed Records
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN]. The reason for the late filing was the unfortunate loss/destruction of my tax records due to [Explain How Records Were Lost/Destroyed, e.g., fire, flood, theft].
Reconstructing these records required a significant amount of time and effort. I made every attempt to file as soon as possible once I had gathered the necessary information. I can provide [Mention any supporting documentation, e.g., police report, insurance claim].
I respectfully request that you consider these circumstances and waive the penalty, as I believe I am otherwise eligible for FTA.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 12: Served in Combat Zone
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number is [Your SSN]. During the tax year in question, I was serving in a designated combat zone, [Name of Combat Zone], from [Start Date] to [End Date].
This service significantly impacted my ability to manage my financial affairs and meet my tax obligations. I am attaching a copy of my military orders as verification. While the IRS provides certain extensions for those serving in combat zones, there may have been an oversight or misunderstanding.
I respectfully request that you waive the penalty in light of my service and eligibility under the First Time Penalty Abatement policy.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 13: Spouse Passed Away
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number is [Your SSN]. My spouse, [Spouse’s Name], passed away on [Date of Death]. I am attaching a copy of the death certificate.
The loss of my spouse was a devastating event, and managing the estate and related affairs consumed a significant amount of my time and emotional energy, preventing me from filing our taxes on time. This was an isolated incident, and I have consistently filed and paid my taxes on time in the past.
I respectfully request that you waive the penalty under the First Time Penalty Abatement policy, given these extenuating circumstances.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 14: Mental Health Issues
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number is [Your SSN]. During the period for filing taxes, I was experiencing a period of severe mental health issues. I was diagnosed with [Mental Health Condition] on [Date of Diagnosis] and was under the care of [Doctor’s Name/Therapist’s Name].
This condition significantly impacted my ability to manage my affairs, including filing taxes. While I understand the importance of timely filing, I was unable to do so due to my health. I am attaching a letter from my doctor as supporting documentation (with their permission, complying with HIPAA laws). I have consistently met all my tax obligations in the past and now have recovered.
I respectfully request that you waive the penalties under the First Time Penalty Abatement policy, given these circumstances.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 15: Incarceration
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number is [Your SSN]. I was incarcerated from [Start Date] to [End Date].
During my time in custody, I did not have access to the necessary resources to file my taxes. This circumstance prevented me from meeting my tax obligations within the prescribed timeframe. I am attaching documentation confirming my incarceration period.
I respectfully request a waiver of the penalties under the First Time Penalty Abatement policy, considering these exceptional circumstances.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 16: Identity Theft
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN]. During the filing period, I was a victim of identity theft, which significantly impacted my ability to file my taxes accurately and on time.
The identity theft resulted in [Explain what happened, e.g., unauthorized access to accounts, fraudulent filings]. I have reported the identity theft to the Federal Trade Commission (FTC) and local law enforcement. I have also taken steps to secure my personal information. I am attaching copies of the FTC report and police report as supporting documentation.
I respectfully request a waiver of the penalties under the First Time Penalty Abatement policy, given the circumstances.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 17: Business Closure or Bankruptcy
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Employer Identification Number (EIN) is [Your EIN]. My business, [Business Name], was forced to close/file for bankruptcy during [Tax Year] due to unforeseen economic circumstances.
The closure/bankruptcy significantly impacted my ability to manage my business affairs and meet my tax obligations. I was primarily focused on ensuring the well-being of my employees and creditors. I am attaching documentation related to the business closure/bankruptcy proceedings.
I respectfully request a waiver of the penalties under the First Time Penalty Abatement policy.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name/Title]
Sample 18: Lack of Knowledge/Understanding (Use Sparingly)
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN]. As a first-time filer [Or very inexperienced filer], I was unaware of the specific requirements and deadlines for filing [Tax Form Number].
I now understand my tax obligations and have taken steps to ensure future compliance by [Explain what you are doing differently, e.g., hiring a tax professional, using tax software]. I have always intended to comply with all tax laws.
I respectfully request a waiver of the penalties under the First Time Penalty Abatement policy, considering my lack of knowledge and my commitment to future compliance. (Note: This reason is less likely to be successful and should only be used if truly applicable and you can demonstrate a genuine effort to learn and comply.)
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 19: Error by a Tax Professional (CP2000 or Similar Notice)
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number] (Regarding CP2000 Notice)
Dear Sir/Madam,
I am writing in response to the CP2000 notice I received for the [Tax Year] tax year and to request a First Time Penalty Abatement for any resulting penalties. My Social Security Number (or EIN) is [Your SSN/EIN]. I relied on the services of a qualified tax professional, [Tax Professional’s Name/Company Name], to prepare and file my taxes.
The discrepancy noted in the CP2000 notice appears to be due to an error made by my tax preparer. I have contacted [Tax Professional’s Name/Company Name] to address this issue and to amend my return, if necessary. I am attaching a copy of the engagement letter and any relevant correspondence with my tax preparer.
I have always filed and paid my taxes to the best of my ability and relied on professional advice. I am taking corrective action to address this error. I respectfully request that you waive any penalties under the First Time Penalty Abatement policy, as I believe the error was unintentional and made by a professional I entrusted with my tax preparation.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Sample 20: Complex Tax Situation (New Business, Significant Life Event)
[Your Name/Business Name]
[Your Address]
[Your City, State, ZIP Code]
[Date]
Internal Revenue Service
[IRS Address from Notice]
[City, State, ZIP Code]
RE: Request for First Time Penalty Abatement – [Tax Year] – [Tax Form Number]
Dear Sir/Madam,
I am writing to request a First Time Penalty Abatement for the penalty assessed for the [Tax Year] tax year. My Social Security Number (or EIN) is [Your SSN/EIN