IRS tax penalties, such as failure to file, failure to pay, and failure to deposit, are not permanent if you know how to fight them. 

The IRS officially offers two main programs to remove IRS penalties: First Time Abatement (FTA), a one-time administrative waiver tied to your 3-year compliance history, and Reasonable Cause, a case-by-case review based on what actually stopped you from filing or paying. 

You may not know these exist, or you could use the wrong one first and lose your best option. In this blog, we will break down first-time abatement vs. reasonable cause, how each works, what the IRS actually accepts, and which one to use first so you keep the most money in your pocket.

The Two Main Ways To Remove IRS Penalties

The IRS recognizes three types of penalty relief: First-Time Abate (FTA), Reasonable Cause, and Statutory Exception. For most individual and business taxpayers, the most used paths are

  • IRS first-time abatement (administrative waiver)
  • Reasonable cause (facts and circumstances review)

These apply to common penalties such as:

  • Failure to file
  • Failure to pay
  • Failure to deposit
  • Accuracy-related penalties
  • Information return penalties

This structure matters because your request type changes how the IRS reviews your case. That is the technical foundation behind first-time abatement vs reasonable cause.

First Time Abatement (FTA): The “One-Time” Administrative Waiver

IRS first-time abatement is an administrative waiver. It’s the most common type of penalty relief for both individuals and businesses.

If you have a clean tax history (no penalties in the past three years), you may qualify automatically. You don’t have to explain yourself or prove hardship. The IRS reviews your account and either approves or denies it.

Penalties eligible for FTA include:

  • Failure to File (for tax returns, partnership returns, S corporation returns)
  • Failure to Pay (when tax shown on the return isn’t paid by the due date)
  • Failure to Deposit (when tax isn’t deposited correctly or on time)

Note: 

  1. FTA does not apply to estimated tax penalties.
  2. You can request FTA even when the tax is not fully paid.
  3. However, the failure-to-pay penalty keeps growing until the balance becomes zero.

Reasonable Cause: The Defense Based On Facts And Circumstances

Reasonable cause is a situation where something outside your control stopped you from filing or paying on time. The IRS looks at your full situation, such as what happened, when it happened, and how it stopped you from complying.

This is not automatic. You have to prove it. The IRS determines reasonable cause on a case-by-case basis. There’s no guaranteed result. But if your situation qualifies, the IRS may waive the penalty completely.

First-Time Abatement: When To Use It (And When To Save It)

To qualify for the IRS first-time abatement, you must meet these conditions:

  • You filed the same return type for the past 3 tax years (if required)
  • You had no penalties during those 3 years, or any penalty was removed for a reason other than FTA
  • You haven’t already used First-Time Abate relief

The Strategy: Why You Should Never Waste FTA on a Small $200 Penalty

FTA is a one-time card. Once you use it, it’s gone, at least until you rebuild a clean 3-year history again.

If you have a small $200 penalty this year and a $5,000 penalty sitting in a different period, using FTA on the $200 is a costly mistake. Penalty abatement services typically advise saving FTA for the largest penalty you face.

Try reasonable cause first. If it works, your FTA stays intact. If it doesn’t work and you qualify for FTA, the IRS will actually apply FTA automatically, even if you only asked for reasonable cause. 

The IRS confirms this in their official guidance: “If you apply for reasonable cause but our records show you qualify for First Time Abate, we’ll apply the latter.”

Reasonable Cause Standard: How The IRS Decides

The IRS does not approve reasonable cause because the situation sounds serious.
Approval depends on proof and responsible behavior.

You must show:

  • Compliance before the event
  • Compliance after the event
  • Effort to meet the deadline
  • Quick correction once the issue ends

Conditions that usually fail in a reasonable cause

The IRS clearly rejects:

  • Forgetting a deadline
  • Not knowing the law
  • Relying only on a tax preparer
  • Lack of money by itself

Medical & Hardship: Serious illness, death in the family, or unavoidable absence

Valid cases include:

  • Hospitalization of the taxpayer
  • Serious illness during the filing period
  • Death of an immediate family member

Required proof:

  • Hospital records
  • Doctor letters with dates
  • Legal documents for death or estate matters

Records Destruction: Fire, flood, or theft of business records

Relief is possible when:

  • Fire damages business records
  • Natural disasters destroy documents
  • Theft removes financial data

For relief, you must show your updated Insurance reports, police reports, or any attempts to rebuild records.

If an IRS-approved system fails near the deadline and proof exists, relief can be applied. These are strong, reasonable cause examples that can remove IRS penalties without using FTA.

Authority rule for businesses

For business penalties, the IRS reviews the person responsible for compliance, not the company in general. This detail affects payroll tax and corporate filing cases.

Comparison: First-Time Abatement vs Reasonable Cause

FTA is based on your history, and Reasonable Cause is based on your circumstances. Knowing which one fits your actual situation changes the result entirely.

Factor IRS First Time Abatement Reasonable Cause
Approval basis Compliance history Documented events
Proof required No Yes
Processing speed Often fast by phone Slower if written request
Future impact Uses the compliance window No impact on FTA
Best use Large penalties with a clean history Event-based failures

Burden of Proof: Why FTA Is Automatic but Reasonable Cause Requires Evidence

First-time abatement vs. reasonable cause comes down to the burden of proof. FTA is mechanical. The IRS checks your file. If the numbers line up, they grant it.

Reasonable cause is the opposite. You carry the full burden. You explain the situation, provide dates, and submit supporting documents. The IRS agent reviews all the facts and makes a judgment call.

This is also why unfiled taxes help from a qualified tax professional matters here because they know how to frame your situation in a way the IRS accepts.

Success Rates: Why We Try Reasonable Cause First Before Using Your FTA

This is where strategy makes or breaks your abatement case. Salinger Tax Consultants is led by Peter Salinger, a former IRS Revenue Officer and Appeals Settlement Officer with 30+ years inside the IRS. He knows exactly how the IRS thinks.

Here’s how we help you remove IRS penalties the right way:

  • We try reasonable cause first, so your FTA stays untouched for a bigger penalty
  • We build a documented case with the exact facts the IRS accepts
  • We identify which penalty period is worth using FTA on, so you don’t waste it
  • We deal directly with the IRS on your behalf 
  • We have resolved over $100 million in tax cases nationwide

Book a consultation with Salinger Tax Consultants today.

How To Request Penalty Abatement

The IRS accepts penalty relief requests through a defined process that starts with the notice you received. You must always follow the instructions printed on that notice because the IRS links your request to that specific penalty period.

Your request path depends on whether you are using IRS first-time abatement or reasonable cause.

The Phone Call: When FTA can be granted verbally over the phone

For an IRS first-time abatement, the fastest method is a direct phone request.

During the call, you need:

  • The IRS notice number
  • The penalty type
  • The tax year involved

You do not need to:

The IRS employee checks your compliance history in real time and applies the relief when you qualify. This is why phone requests often produce same-day penalty removal.

Form 843: The form used to claim reasonable cause

You file Form 843 when:

  • The IRS cannot approve relief during the call
  • You need to submit documents
  • The case involves complex facts

Your written request must include:

  • A clear timeline of events
  • The exact date the problem started
  • The exact date the problem ended
  • Your compliance attempts during that period
  • Your corrective action after the event

You must attach proof such as:

  • Hospital records with treatment dates
  • Insurance or disaster reports
  • Police reports for theft
  • Written communication showing your attempts to comply

This documentation converts your explanation into a valid, reasonable cause case.

Where You Lose Your Abatement Case

The IRS denies many requests because the explanation does not connect the event to the missed deadline.

Your statement must show:

  • The event directly caused the late filing or payment
  • You acted immediately after the event ended

Without that link, the IRS treats the situation as a personal difficulty, not a reasonable cause.

Stop IRS Penalties With Salinger Tax Consultants Now

Every day you sit on an IRS penalty, interest compounds, and collection actions move closer. Your FTA is a limited card; use it on the wrong penalty, and it’s gone. 

Salinger Tax Consultants is built for exactly this situation. Our team knows how the IRS reviews reasonable cause and first-time abatement cases from the inside out. Our team of former IRS agents, CPAs, and Certified Tax Resolution Specialists has resolved over $100 million in tax debt nationwide. 

Whether you need to remove IRS penalties or settle your full tax debt for less, we build the kind of case the IRS respects. Contact Salinger Tax Consultants today before that penalty grows another dollar.

FAQs

First-time abatement checks your 3-year compliance history; no explanation is needed if it's clean. Reasonable cause reviews the specific facts of what happened to you. One is history-based; the other is circumstance-based. You can only use FTA once per clean compliance cycle.

Valid reasonable cause examples include death or serious illness of the taxpayer or immediate family, fires or natural disasters that destroyed business records, and system failures that caused missed electronic filings.

Call the IRS toll-free number on your notice. You don't need to say "First Time Abatement"; the IRS pulls your account and checks automatically. For an IRS first-time abatement, no supporting documents are required. If the phone call doesn't resolve it, submit Form 843 in writing with a brief explanation.

Yes, but not consecutively. You must rebuild a full 3-year clean compliance history before qualifying again. If you used FTA in 2023, you need penalty-free filing and payment for 2024, 2025, and 2026 before the IRS considers you eligible again. The IRS tracks this across your entire account.

No. The IRS explicitly categorizes mistakes and oversights as the taxpayer's personal responsibility. Forgetting a deadline does not qualify. If additional documented facts show you took steps to comply, but something outside your control stopped you, then those specific facts may still qualify separately.

Yes. If your FTA request is denied, you can apply for a different type of relief or follow the IRS Penalty Appeal process. If reasonable cause is denied, you can appeal with stronger documentation. The IRS Office of Appeals accepts formal written protests, and decisions there are made independently from the original reviewer.