Practitioner Tool: First Time Abatement

One often overlooked tool to help solve penalty issues for clients is the First Time Abatement policy the IRS has.

If your client has a clean filing history the past three years (has filed and paid or made arrangements to pay all required returns and no penalties related to the return you are seeking abatement for), then the IRS will abate certain penalties. If working a tax debt resolution issue, tax due in the year of the penalty is not considered when determining a clean filing history.

You can abate the following penalties:

• Failure to File
• IRC 6651(a)(1) - Covers your individual returns
• IRC 6698(a)(1) - Failure to File Partnership Return
• IRC 6699(a)(1) - Failure to File S Corp Return
• Failure to Pay
• IRC 6651(a)(2)
• IRC 6651(a)(3)
• Failure to Deposit
• IRC 6656

As the name implies, first time abate can only be used once. When requesting first time abatement, it is always best practice to try a reasonable cause argument prior to your first time abate request if applicable.

Relevant Citations: IRM 20.1.1.3.6.1 (08-05-2014)