First time penalty abatement: the clean-history test and the 2027 switch

What is first time penalty abatement?

First time penalty abatement is an administrative waiver: the IRS removes certain penalties based on your good compliance record rather than on the reason you were late. You do not have to explain what went wrong. If your history passes the test, the penalty for the period in question is removed along with the interest charged on it.

The IRS calls it First Time Abate. It covers three penalties: failure to file, failure to pay and failure to deposit (the last one applies to employers and other businesses making payroll tax deposits). It does not appear on the IRS list of covered penalties for the estimated tax penalty, so relief for that charge works through its own rules on Form 2210.

Who qualifies for first time abate? The clean-history test

You qualify for first time abate if you have what the IRS calls a timely compliance history. There are two parts, and both look only at the three tax years before the year you want relief for (or the 12 quarters before, for quarterly returns such as Form 941).

Part one: returns filed on time

You must have filed the same type of return on time for each of the prior three years. For a Form 1040 penalty on tax year 2024, the IRS looks at your tax years 2021, 2022 and 2023 Form 1040 filings. A return filed under a valid extension counts as on time.

Part two: no penalties in those years

No penalty may have been assessed in those three years, with two exceptions. An estimated tax penalty does not count against you. And a penalty that was assessed but later removed for reasonable cause or IRS error is ignored. A penalty removed for any other reason, or one you simply paid, still counts.

Extra tests for businesses

Business filers must also show that the IRS did not waive failure-to-deposit penalties four or more times in the prior three years, and that no penalty was charged for not using the Electronic Federal Tax Payment System (EFTPS) when required.

First time penalty abatement requirements in real situations

The table applies the IRS test to common Form 1040 situations for a penalty on a tax year 2024 return. It is a reading of the published rules, not an IRS ruling on any account.

If you fail the test, you are not stuck. Reasonable cause penalty abatement looks at why you missed the deadline instead of at your history.

Which penalties and returns does it cover?

The IRS lists these returns as eligible for administrative penalty relief: Forms 1040, 1065, 1120, 940, 941, 943, 944, 945 and CT-1. So first time penalty abatement on a 1040 covers the failure-to-file and failure-to-pay penalties on an individual return, the two penalties most people see on a CP14 or later bill.

• Not covered: returns filed only for a single event or infrequently, such as Form 706 and Form 709.
• Not covered: the daily delinquency penalty and information returns that depend on other filings.
• Not covered: the estimated tax penalty, which has its own waiver rules.
• Interest: interest on the removed penalty goes too; interest on the tax does not.

For the size of the penalties at stake, see the failure to file penalty page: on a large balance, removing a 22.5% late filing charge can be worth thousands of dollars.

Is first time abate being replaced?

Yes, in stages. On July 8, 2026 the IRS announced the Automatic Exemption from Penalty (AEP), which uses the same history test but applies relief during processing, so the penalty is never assessed and you never have to ask. AEP replaces first time abate for eligible returns with original due dates on or after January 1, 2027.

First time abate still matters in three cases: penalties on tax years 2024 and earlier, tax year 2025 returns not yet considered for AEP, and anyone who receives a penalty notice during the transition even though they meet the test. Our page on IRS automatic penalty relief covers the new program in detail.

How do I ask for it, and what if I do not qualify?

You can ask by calling the number on your penalty notice, by writing to the IRS, or by filing Form 843, Claim for Refund and Request for Abatement. You do not need to use the words first time abate or attach anything. Step-by-step instructions, including a letter outline, are in how to request first time penalty abatement.

If the IRS finds your history does not qualify, it tells you, and you can still request relief for reasonable cause. The full set of penalty rates and relief options is in the IRS penalties guide.