How to Request an IRS Waiver of Penalty

IRS penalties are designed to encourage timely filing and payment of taxes. The agency understands that sometimes circumstances beyond a taxpayer’s control can prevent compliance. For this reason, the IRS has established clear procedures for taxpayers to request the removal, or abatement, of certain penalties. Understanding the grounds for relief and the process for making a request is the first step toward resolving the issue.

Grounds for Penalty Relief

The IRS provides several avenues for penalty relief, each with specific eligibility requirements. The most common reasons for granting a waiver fall into distinct categories, including a history of good conduct, extenuating life circumstances, or specific legal exceptions. The agency will often consider the most straightforward option first before moving to more complex, fact-based determinations.

First-Time Penalty Abatement

For many, the most accessible form of relief is the First-Time Penalty Abatement (FTA). This administrative waiver is available to taxpayers who have a clean compliance history. To qualify, you must demonstrate that for the three years preceding the tax year in question, you filed all required returns and had no penalties assessed. You must also be current on paying or have arranged to pay any tax due. FTA applies to the failure-to-file, failure-to-pay, and failure-to-deposit penalties.

Reasonable Cause

When a taxpayer does not qualify for FTA, they may still obtain relief by demonstrating reasonable cause. This standard requires you to show that you exercised ordinary business care and prudence but were still unable to meet your tax obligations due to unforeseen events. Common examples include the death or serious illness of the taxpayer or an immediate family member close to a tax deadline, or a natural disaster that destroyed your records or home. Other valid reasons can include an unavoidable absence or receiving incorrect advice from a tax professional upon which you reasonably relied.

Statutory Exceptions

In some instances, the tax code itself provides an exception that excuses a penalty. These statutory exceptions are less common and apply to specific situations defined by law. A frequent example is relief granted to taxpayers living in a federally declared disaster area. Another statutory exception can apply if a taxpayer receives erroneous written advice directly from the IRS and a penalty results from following that incorrect guidance.

Information and Documents for Your Request

A penalty waiver request depends on a well-prepared and thoroughly documented case. Your request must include specific identifying information, which consists of your full name, address, and Social Security Number (SSN) or Taxpayer Identification Number (TIN). You will also need to specify the tax year for which you are requesting the waiver and the tax form number involved. The IRS notice you received is a source for this information and will also contain the specific penalty amount and the Internal Revenue Code section related to the penalty.

The strength of a request, particularly one based on reasonable cause, lies in the quality of your supporting documentation. You must provide objective evidence to substantiate your claims. For a waiver based on a serious illness, this would include copies of hospital records or a letter from a physician detailing the dates of incapacitation. In the case of a natural disaster, you might provide insurance reports or photos of the damage. If your claim is based on incorrect advice from a tax advisor, a signed letter from that professional explaining the circumstances is needed.

The primary vehicle for a written request is IRS Form 843, Claim for Refund and Request for Abatement. You will use the information you gathered to complete the form with your personal details and tax information. The form includes a section where you will write a detailed, chronological explanation of why you believe the penalty should be waived, referencing the supporting documents you are attaching.

How to Submit Your Waiver Request

Once you have completed Form 843 and gathered all your supporting documents, the next step is to assemble and submit the package to the IRS. While some simple FTA requests can sometimes be handled over the phone, a written request is required for reasonable cause and provides a clear record of your case.

Your submission should be organized as a single package. It is helpful to begin with a brief cover letter that summarizes your request, stating the tax year and the penalty you are asking to have abated. Place the completed Form 843 directly behind the cover letter, and attach copies of all your supporting documents in a logical order. Never send original documents, only clear copies.

The request must be submitted by mail. The correct mailing address for Form 843 is in the official instructions for the form on the IRS website. The penalty notice you received from the IRS will often list the correct service center address.

After You Submit the Request

After mailing your penalty waiver request, it can take several months to receive a response. The IRS will not typically contact you while the request is under review unless it requires additional information.

The conclusion of the review process will be a formal determination letter sent by mail. This letter will state whether your request for penalty abatement has been accepted or denied. If the request is accepted, the penalty will be removed from your account. If you had already paid the penalty, the IRS will issue a refund for that amount, including any associated interest that was charged.

If your request is denied, the determination letter will explain the reasons for the denial. You have the right to appeal the decision. The letter will provide instructions on how to file an appeal, which must be done within 30 days, with the IRS Independent Office of Appeals. This office is separate from the compliance division that made the initial decision and will conduct an impartial review of your case.