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IRS First-Time Penalty Abatement and Payment Plans: What to Ask For and How

An office desk phone, with a sticky note reading “First time?”.
Photo by Julian Hochgesang on Unsplash

The notice shows the tax you expected and a line you didn't: a penalty, often with interest already stacked on top. Plenty of those penalties come back off. Take fiscal 2025. That year the IRS removed over 3.1 million failure-to-pay penalties. One of the main routes is a policy called first-time abatement, and it starts with a request. The conditions are exact, though, and one penalty in the wrong year means no.

The phone script and the forms

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By Ray Castellano · Updated Sep 29, 2026 · Reviewed against IRS

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It costs nothing to ask, and you don't need a lawyer. Where people slip is timing. The failure-to-pay penalty keeps growing until the tax is paid in full, so getting an old penalty removed doesn't stop new ones from piling up on a balance that's still open.

Interest runs on penalties too, compounded daily. The rate on individual underpayments is 7%. That's for the quarter starting October 1, 2026. Interest can't be removed by itself, but the IRS says the interest tied to a penalty comes off along with the penalty.

Didn't qualify? See the reasonable cause route

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Before you pay anyone to handle a penalty

Most first-time abatement requests take one phone call, and a paid firm can't make that call any better than you can. Sometimes paid help does earn its fee, and it's worth knowing when.

  1. When it's worth paying. Several tax years tangled together, a balance over the online limits, or a lien or levy notice on the table. An offer in compromise counts too, since one mistake in the financial statement can sink it.
  2. Who can represent you. Look for someone allowed to represent you before the IRS: an enrolled agent, a CPA or a tax attorney.
  3. The fee, on paper. Get it in writing before any work starts, and ask what outcome they expect and why.
  4. A promised result. If a firm promises one, walk away.
  5. Free options. Low Income Taxpayer Clinics give free representation to low-income taxpayers, and the Taxpayer Advocate Service steps in when the normal process has broken down.

For one penalty on a clean record, the call itself comes first. The article lays out the three-year rule, a short phone script, the forms to send, and what payment plans and settlement offers really cost.

See what a payment plan costs

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