How to Get the IRS to Remove Your Penalties — Even If You Owe Thousands

If you owe the IRS, there’s a good chance a significant portion of your balance isn’t tax — it’s penalties.

Many taxpayers are shocked to learn that penalties and interest can add thousands, sometimes tens of thousands, of dollars to their original tax debt. What started as a manageable balance can quickly spiral out of control.

What most people don’t realize is that the IRS has a powerful program called First Time Penalty Abatement (FTA) that may allow these penalties to be removed entirely.

If you qualify, this program can dramatically reduce your IRS debt. At GenWealth Tax Relief, we specialize in negotiating First Time Penalty Abatement on behalf of our clients. If you need help resolving your IRS balance, contact us to schedule a confidential consultation.

What Is First Time Penalty Abatement?

First Time Penalty Abatement is an administrative waiver the IRS offers to taxpayers who have a history of compliance but fell behind for the first time.

This program allows the IRS to remove certain penalties, including:

•Failure-to-File penalties

•Failure-to-Pay penalties

•Failure-to-Deposit penalties (for business owners)

These penalties alone can add up to 25% or more of your original tax balance.

For example, if you owed $20,000 in taxes, penalties could add another $5,000 or more — before interest even begins to accumulate. Penalty abatement can immediately reduce what you owe and slow the growth of your balance.

Why the IRS Offers This Program

The IRS understands that even responsible taxpayers experience hardship — divorce, illness, business losses, job loss, or unexpected life events can throw anyone off track.

First Time Penalty Abatement exists to help taxpayers who normally comply but had a temporary setback.

However, the IRS will not automatically apply this relief. You must qualify and request it properly.

That’s the problem — most taxpayers never request penalty abatement simply because they don’t know it exists.

Who Qualifies for First Time Penalty Abatement?

To qualify, the IRS generally looks at three things:

•You filed all required tax returns (or filed valid extensions)

•You have no significant penalties in the prior three tax years

•You are addressing your balance — either paying it or working toward a resolution

You don’t need a perfect history. The IRS simply needs to see that your noncompliance was an exception, not a pattern. Even if you still owe money, you may still qualify.

One important update: as of March 2023, the IRS no longer requires you to have a formal payment arrangement in place before requesting FTA. This makes it more accessible than many taxpayers — and even some tax professionals — realize.

How Much Can First Time Penalty Abatement Save You?

The savings can be significant. We’ve seen real-world results where:

•A $12,000 penalty was completely removed

•A $7,500 penalty was eliminated

•A taxpayer’s total IRS balance dropped by 20–30%

Removing penalties also reduces the amount of interest that accumulates going forward — which lowers your total debt over time. This relief alone can make resolving your tax situation far more manageable.

The IRS Will Not Automatically Apply It

This is critical: the IRS does not automatically grant penalty abatement. Even if you qualify, nothing happens unless you request it.

Many taxpayers assume the IRS will handle it on their end. They won’t.

You must request it strategically — and your compliance status must be properly established before you do. If FTA is requested too early or incorrectly, the IRS can and will deny it. Knowing when and how to ask makes all the difference.

How Is First Time Penalty Abatement Requested?

There are two ways to request FTA:

By phone — A tax professional can call the IRS Practitioner Priority Service line and request abatement verbally. This is often the fastest method and can result in same-day removal of penalties.

In writing — Using IRS Form 843 (Claim for Refund and Request for Abatement). This is typically used when the penalty balance has already been paid and you’re requesting a refund, or when a phone request has been denied.

Important: a phone denial does not permanently close the door. A written request via Form 843 can still be submitted and reviewed independently.

If your penalty balance is under $3,000, your tax professional may be able to provide you with a pre-completed Form 843 that you submit yourself — keeping your costs down while still getting the relief you deserve.

First Time Penalty Abatement Is Often Just the Beginning

Penalty abatement is one of the most powerful tools available — but it’s often part of a larger resolution strategy. Depending on your financial situation, you may also qualify for:

•Payment plans structured around your budget

•Currently Not Collectible (CNC) status

•Offer in Compromise settlements

•Collection holds that stop IRS enforcement actions

Removing penalties first can make these options more accessible and easier to negotiate. In many cases, FTA is the first step toward fully resolving your IRS debt.

Acting Early Can Save You Thousands

The longer IRS penalties remain in place, the more interest accumulates — and your balance grows month after month, even if you’re not adding new debt.

Acting early allows you to reduce your balance sooner and prevent unnecessary financial damage.

Many people wait years before addressing their IRS debt, only to discover they could have reduced it significantly much earlier. The sooner you act, the more options you have.

You Don’t Have to Face the IRS Alone

IRS penalty relief programs exist — but they must be requested properly, at the right time, in the right way.

If you owe the IRS and penalties are driving up your balance, you may qualify for significant relief.

GenWealth Tax Relief helps individuals and business owners navigate IRS resolution from start to finish. We’ll review your situation, determine if you qualify for First Time Penalty Abatement, and build a clear plan to reduce and resolve your tax debt.

Schedule a confidential consultation today

The IRS has programs designed to help. But you have to take the first step — and the sooner you act, the more you may be able to save.