Can IRS penalties be removed?
Often, at least in part. The law excuses filing, payment and deposit penalties where the failure was due to reasonable cause and not willful neglect, and the IRS separately waives some first-time penalties. The tax itself, and most interest on it, stays.
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Reasonable cause.
The failure-to-file, failure-to-pay and failure-to-deposit penalties do not apply where the failure was due to reasonable cause and not willful neglect.
The standard for filing
A late return is due to reasonable cause if you exercised ordinary business care and prudence and were nevertheless unable to file on time.
Law · IRC §6651(a)(1); Treas. Reg. §301.6651-1(c)(1)The standard for paying
A late payment is due to reasonable cause if you exercised ordinary business care and prudence in providing for the tax and were still unable to pay, or would have suffered undue hardship by paying on time. Lavish spending or speculative investments do not meet that standard.
Law · IRC §6651(a)(2); Treas. Reg. §301.6651-1(c)(1)Relying on someone else
Relying on an advisor to file or pay on time is generally not reasonable cause, because the deadline is your responsibility. Relying on an advisor's substantive advice about a matter of tax law can be.
Law · United States v. Boyle, 469 U.S. 241 (1985)A written statement
Reasonable cause is shown by an affirmative statement of the facts, made under penalties of perjury.
Law · Treas. Reg. §301.6651-1(c)(1)What the IRS considers, and what it usually doesn't.
The IRS decides reasonable cause case by case. Circumstances it considers include fires and natural disasters, inability to get records, death, serious illness or unavoidable absence of the taxpayer or immediate family, and system issues that delayed an electronic filing or payment.IRS practice · IRS penalty relief for reasonable cause
It generally does not accept lack of knowledge, mistakes or oversights, or lack of funds by itself.IRS practice · IRS penalty relief for reasonable cause
An administrative waiver.
Separately from reasonable cause, the IRS will, on request, waive failure-to-file, failure-to-pay and failure-to-deposit penalties for a first offense when, broadly, the same type of return was filed on time for the prior three years and no penalties (other than an estimated tax penalty) were assessed in that period, or any were removed for reasonable cause.IRS practice · IRS first-time abatement
This is an IRS policy, not a statute, and it is being replaced. Under the IRS's new Automatic Exemption from Penalty, certain failure-to-file, failure-to-pay and failure-to-deposit penalties are not assessed during original return processing for taxpayers with three prior years (or 12 quarters) of timely compliance; no request is needed. For original returns due on or after January 1, 2027, first-time abatement will no longer be available. Until then it remains available on request for eligible 2024 returns, eligible 2025 quarterly returns, and eligible 2025 annual and 2026 quarterly returns processed before the automatic program starts. Taxpayers who don't qualify can still request relief for reasonable cause.IRS practice · IRS Fact Sheet FS-2026-12 (July 2026)
What happens to interest.
Interest on a penalty and interest on the tax are treated differently.
Interest on a removed penalty
When the IRS reduces or removes a penalty, it reduces or removes the interest charged on that penalty.
IRS practice · IRS penalty relief guidanceInterest on the tax
Reasonable cause does not remove interest on the tax itself. Interest on tax can be abated only in limited cases, such as an unreasonable error or delay by an IRS employee in a ministerial or managerial act.
Law · IRC §6601; §6404(e)Erroneous written IRS advice
The IRS must abate a penalty attributable to erroneous written advice from the IRS that you reasonably relied on, given in response to your specific written request, where you provided adequate and accurate information.
Law · IRC §6404(f)Deposits for employers
For payroll deposits, the IRS may waive a first-quarter deposit penalty for inadvertent failures by new depositors, and abate a first deposit mistakenly sent to the IRS instead of a depository.
Law · IRC §6656(c), (d)Request it with a record, not a story.
A penalty request succeeds on facts matched to the legal standard, documented, and presented for the right years in the right order. Where reasonable cause exists, it should be presented as reasonable cause.Bridge's view · practitioner judgment
First-time abatement covers a single tax period. Where penalties fall in several periods, IRS procedures apply it to the earliest one, and the others need reasonable cause.IRS practice · IRM 20.1.1.3.3.2.1(10)
We take it from here.
- We take controlOnce you sign the authorization, we deal with the IRS for you. Send us any IRS letter you receive.
- Exactly where you standEvery penalty, by year and type, taken from your IRS record.
- Your deadlines, risks and leverageIncluding which penalties qualify for which kind of relief.
- Your Resolution RoadmapIn writing: which penalties to challenge, on what basis, and the paths open for what remains.
Primary sources: Internal Revenue Code §6651, §6656, §6601 and §6404; Treasury Regulation §301.6651-1; United States v. Boyle, 469 U.S. 241 (1985); IRS, Penalty relief for reasonable cause, first-time abate and Automatic Exemption from Penalty. General information, not advice for your situation.