IRS Penalty Abatement & Penalty Relief

You May Qualify to Have IRS Penalties Reduced or Removed

IRS penalties can add significantly to an already difficult tax problem. Depending on your circumstances, however, you may qualify for IRS penalty relief that reduces or removes certain penalties.

Tax Help Hawaii can review your IRS account, determine which penalties have been assessed and evaluate whether you may qualify for reasonable-cause relief, administrative relief or another applicable penalty-relief provision.

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Call Tax Help Hawaii: 310-966-0266

What Is IRS Penalty Abatement?

Penalty abatement generally refers to the reduction or removal of certain penalties assessed by the IRS.

The IRS assesses many different types of penalties, and not every penalty qualifies for the same type of relief.

Potentially eligible penalties can include certain:

Failure-to-file penalties
Failure-to-pay penalties
Failure-to-deposit penalties
Accuracy-related penalties
Information-return penalties
Other penalties when applicable

Whether a penalty can be removed depends on the type of penalty, tax period, compliance history and circumstances surrounding the failure.

Reasonable Cause Penalty Relief

One important form of IRS penalty relief is based on reasonable cause.

The IRS generally looks at all the facts and circumstances to determine whether you exercised ordinary business care and prudence but were nevertheless unable to meet your tax obligations.

Tax Help Hawaii will review what happened, when it happened, how it affected your ability to comply and what you did to correct the situation.

What Circumstances May Support Reasonable Cause?

Depending on the penalty and individual circumstances, the IRS may consider situations such as:

Serious Illness, Death or Unavoidable Absence

A serious illness, death in the immediate family or another unavoidable absence may support reasonable cause when it directly affected your ability to file or pay on time.

Fire, Natural Disaster or Other Disturbance

Fires, natural disasters and certain other significant disruptions may qualify when they prevented you from meeting your tax obligations.

Inability to Obtain Necessary Records

If important tax records were unavailable despite reasonable efforts to obtain them, the IRS may consider the circumstances surrounding that inability.

Certain Mistakes or Circumstances Beyond Your Control

A mistake by itself does not automatically establish reasonable cause. However, the IRS may consider additional facts showing that you made reasonable efforts to comply with your tax obligations.

The strength of a reasonable-cause request often depends on the specific facts and supporting documentation.

What Usually Does NOT Qualify by Itself?

It’s equally important to understand what generally isn’t enough on its own.

Simply forgetting to file or pay, not understanding the tax law, lacking money or relying on someone else to meet your tax obligations does not automatically establish reasonable cause.

There can be exceptions depending on the type of penalty and surrounding facts, which is why each case should be evaluated individually.

What Documentation May Help?

Depending on the reason for requesting relief, supporting documentation may include:

Medical or hospital records
Documentation showing illness or incapacity
Death certificates or related records
Insurance or disaster documentation
Correspondence showing attempts to obtain missing records
IRS notices and letters
Proof of filing or payment
Relevant correspondence with tax professionals
Other records establishing what happened and when

A strong penalty-relief request should clearly explain the circumstances and connect the documentation to the taxpayer’s inability to comply.

New IRS Automatic Penalty Relief

The IRS introduced a new program in 2026 called the Automatic Exemption from Penalty (AEP).

For qualifying taxpayers with a history of timely compliance, AEP can prevent certain failure-to-file, failure-to-pay and failure-to-deposit penalties from being assessed.

AEP applies to eligible original returns beginning with the 2025 tax year, eligible 2026 quarterly returns, and future qualifying periods.

Generally, the IRS looks for a history of timely filing and payment during the previous three years, or the applicable prior 12 quarters for quarterly filers.

When a taxpayer qualifies, the IRS applies the relief automatically.

Not every taxpayer, tax return or penalty qualifies.

FAQ's

Frequently Asked Questions

What About First Time Penalty Abatement?

The IRS is transitioning away from its traditional First Time Abate (FTA) administrative waiver and replacing it with Automatic Exemption from Penalty for future qualifying periods.

First Time Abate can still apply to certain earlier returns and periods during this transition.

Tax Help Hawaii can review the tax periods involved and determine which type of administrative penalty relief may be applicable.

Can Interest Be Removed Too?

Sometimes indirectly.

The IRS generally charges interest on penalties. When the IRS reduces or removes a penalty, the IRS will also generally reduce or remove the interest associated with that penalty.

However, interest charged on the underlying unpaid tax is subject to different rules and generally isn’t removed simply because a penalty was abated.

What If the IRS Denies Penalty Relief?

A denial doesn’t necessarily mean the matter is over.

Depending on the circumstances, taxpayers may have the right to request reconsideration or appeal an IRS penalty-relief decision.

Tax Help Hawaii can review the IRS determination and determine what options may remain available.

Penalty Relief Is Often Part of a Larger Tax Resolution Strategy

Removing penalties can reduce a tax balance, but it may not solve the entire tax problem.

If you still owe taxes after applicable penalty relief, Tax Help Hawaii can evaluate other resolution options, including:

The objective is not simply to address the penalties. It is to develop an appropriate strategy for resolving the entire IRS tax problem.

Let Tax Help Hawaii Review Your IRS Penalties

If penalties have significantly increased the amount you owe, don’t assume that every penalty must remain on your account.

Tax Help Hawaii can review the penalties assessed, your compliance history and the circumstances that led to the tax problem to determine whether an appropriate basis for penalty relief may exist.

Call Tax Help Hawaii: 310-966-0266

Serving Maui, Hawaii and taxpayers nationwide with qualifying federal IRS tax matters.

IRS penalty relief depends on the type of penalty, tax period, compliance history, individual circumstances and applicable IRS rules. Penalty reduction or removal is not guaranteed.