"Oops” Just Got Cheaper: The IRS Makes the First Time Abatement Penalty Relief Automatic for the 2026 Filing Season

Have you ever gotten hit with penalties from the IRS for filing your tax return late that one time? Did you stay on hold for hours trying to talk to an IRS representative, or just choose to pay the penalties because you couldn’t wait any longer?

Wait no longer! The IRS has announced it will automatically provide First-Time Abatement (FTA) penalty relief to eligible taxpayers starting in the 2026 filing season. This relief will apply to penalties assessed on tax years beginning 2025 and later. Previously, taxpayers had to actively request this relief by phone or mail, but this new procedure will allow qualifying taxpayers and businesses to receive FTA without taking any action at all.

What Penalties Do the Automatic Relief Apply to?

The automatic abatement applies to the following penalties:

• Failure to file;
• Failure to pay; and
• Failure to deposit payroll taxes (for businesses).

Who Is Eligible for Automatic Relief?

To be eligible for the automatic FTA, a taxpayer must meet the following criteria:

• Clean Penalty History for three years: The taxpayer must not have had any penalties for the three previous tax years.
• Filing Compliance: All required tax returns for the past three years have been filed or had valid extensions.

What Do You Need to Do to Get Relief?

The good thing is that qualifying taxpayers do not have to do anything to get automatic relief for returns they file in 2026 and after. If an eligible penalty is assessed, the IRS should automatically reverse this assessment.

How to Monitor the Application of FTA

If a taxpayer is eligible for FTA but expects that they might get a penalty for late filing or payment, they should monitor their IRS account and check their transcripts online to confirm that the automatic abatement was applied. If the automatic abatement was not applied, taxpayers or their representatives can still contact the IRS to request FTA over the phone or by mail.

What if a Taxpayer Has Penalties Again in the Future?

First time penalty abatement is not one-use-only, and a taxpayer may qualify for  FTA multiple times throughout their life. A taxpayer could get FTA again if the taxpayer had a clean penalty history and was filing compliant for the three years immediately preceding the year they are requesting relief.

For example, if a taxpayer received FTA for a penalty in tax year 2025, but remains fully compliant for 2026, 2027, and 2028, they could qualify for FTA again for a penalty in 2029.

Other Options if FTA is Not Available

If not eligible for automatic FTA due to previous late filings or payments, taxpayers can still request penalty abatement relief due to reasonable cause.  EisnerAmper’s Tax Controversy and Dispute Resolution practice has experienced professionals who can assist taxpayers navigate penalties and interest. Contact us below to see how we can help.