First-Time Penalty Abatement Calculator 2026 — IRS FTA Eligibility

First-Time Penalty Abatement is a one-time administrative waiver the IRS grants to taxpayers with a clean compliance history. To qualify you must: (1) have no penalties in the 3 prior tax years, (2) have all required returns filed or extended, and (3) have paid or entered into a payment agreement for any tax owed. FTA applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties on Forms 1040, 1065, 1120, 941, 940, and others.

You have two options: (1) Call the IRS at 1-800-829-1040 and request FTA verbally — this is the fastest method and often granted on the call. (2) File Form 843 (Claim for Refund and Request for Abatement) in writing. The written method is better for larger penalty amounts or if you want a documented record. For business penalties, call the IRS Business & Specialty Tax Line at 1-800-829-4933.

FTA covers three core IRS penalties: Failure-to-File (FTF) — 5% per month up to 25% of unpaid tax for late return filing; Failure-to-Pay (FTP) — 0.5% per month up to 25% of unpaid tax; and Failure-to-Deposit (FTD) — 2% to 15% of underpayment for employment tax deposits. FTA does not cover accuracy-related penalties, civil fraud penalties, or estimated tax penalties.

Reasonable cause is a separate abatement basis that requires demonstrating you exercised ordinary business care and prudence but still failed to comply. Examples include serious illness, natural disaster, death of a family member, or incorrect advice from the IRS. Unlike FTA, reasonable cause requires documentation and judgment by the IRS. If you do not qualify for FTA (prior penalties exist), reasonable cause is your fallback — but it has a lower approval rate.

No. FTA is a true one-time waiver. Once you use it for a tax year and penalty type, you cannot use it again until you maintain 3 more years of clean compliance. Additionally, using FTA for one penalty type in a year does not preclude using it for a different form type in the same year — the 3-year lookback applies per form type. Always save FTA for your largest penalty year.