IRS Updates First Time Penalty Abatement

The Internal Revenue Service has modified its “first time abate” or (FTA) policy, which provides a one-time consideration of penalty relief, based on the taxpayer’s compliance history.

The FTA penalty relief option for failure to file, failure to pay and failure to deposit penalties, under certain conditions, does not apply if the taxpayer has not filed all returns and paid, or arranged to pay, all tax currently due. For example, the taxpayer is considered current if they have an open installment agreement and are current with their installment payments.

The FTA relief only applies to a single tax period for a taxpayer, and penalty relief under the first time abatement provision does not apply to returns with an event-based filing requirement.

Additionally the FTA relief does not apply to the following type returns if a previously filed return was late:

• Form 706 Estate tax Returns
• Form 709 Gift Tax Returns
• Form 1120 C-Corporation Returns
• Form 1120-S S-Corporation Returns

 
Feel free to contact us if you need assistance with a tax penalty abatement or proactive tax planning. 

---