Sunday, July 05, 2015

First Time Abate

Taxpayers who file a return late, make a late payment, or make a late tax deposit are subject to penalties. What is not known by most taxpayers, and a lot of tax practitioners, is that the IRS has a program to abate these penalties for those that have not been subject to them recently. The program for abatement is known as First Time Abate.

First time abatement is an administrative waiver and not statutorily mandated. The program has been underutilized largely because the IRS has not publicized the program and fails to provide taxpayers with guidance when clearly applicable.

To participate, a taxpayer must be otherwise compliant, must have not been previously required to file the return, and must have had no penalties imposed for the prior three years. As showing reasonable cause can be difficult in some situations, this program may provide relief to taxpayers who would otherwise be forced to pay penalties.

Details of the program are in IRM 20.1.1.3.6.1.

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