The IRS recognizes four distinct grounds for penalty abatement. Eligibility under any one is sufficient — a single Form 843 can cite multiple grounds in the alternative, and the IRS examiner will consider each. The four grounds are tested independently, so a taxpayer who fails one may still succeed under another.

Ground 1: First-Time Penalty Abatement

You qualify if all three of the following are true:

  • The penalty in question is failure-to-file, failure-to-pay, or failure-to-deposit
  • You filed all required returns and paid all required taxes on time for the three preceding tax years
  • No previous penalties were assessed in those three years (other than penalties later abated under reasonable cause)

FTA is administrative — no substantiation required, no examination of facts. If the lookback is clean, the IRS grants the abatement. See First-Time Abatement.

Ground 2: Reasonable Cause

You qualify if you can establish that:

  • You exercised ordinary business care and prudence in your tax compliance
  • A circumstance beyond your control prevented timely compliance — illness, casualty, records destruction, advisor error, family crisis
  • You acted promptly to correct the failure once the circumstance resolved

Reasonable cause has no lookback requirement and applies to every assessable penalty — including penalties FTA cannot reach (accuracy-related, information returns, certain trust fund penalties). See Reasonable Cause.

Ground 3: Statutory Exception

You qualify if:

  • The penalty was caused by incorrect written advice from the IRS (§6404(f))
  • Or the penalty was caused by IRS processing delay, lost correspondence, or systemic error
  • Or the IRS failed to apply a mandatory statutory provision — such as the COVID-era postponement under §7508A(d) recently confirmed by Kwong v. United States

See COVID Refund for the Kwong-grounded statutory exception window.

Ground 4: Administrative Waiver

The IRS periodically issues administrative waivers for specific events. Current waivers within the limitations period include:

  • COVID-19 disaster relief — IRC §7508A(d) postponements
  • Disaster zone relief — FEMA-declared disasters extend filing and payment deadlines
  • Combat zone relief — extended deadlines for taxpayers serving in combat zones
— Multiple Grounds Strengthen the Case —

A taxpayer who qualifies under both FTA and reasonable cause should claim FTA first (faster, no risk) and preserve the reasonable-cause argument as fallback. A taxpayer who qualifies under reasonable cause and statutory exception should cite both — they are reviewed independently, and IRS practice is to grant on the strongest available ground.

Who is generally ineligible?

  • Taxpayers with willful, fraudulent, or intentional failures (criminal exposure rather than abatement territory)
  • Taxpayers whose failure was due solely to lack of funds without a triggering reason
  • Taxpayers requesting abatement of penalties already barred by the §6511 statute of limitations
  • Taxpayers whose three-year lookback is dirty AND who lack a documented reasonable-cause event AND have no statutory or administrative ground
Form Used
Form 843 (Claim for Refund and Request for Abatement)
Penalty Types Covered
FTF · FTP · FTD · §6721 · §6722 · §6654 · §6655
Refund Statute
3 years from filing or 2 years from payment (later)
Eligibility
Individuals · Businesses · Nonprofits · Estates · Trusts
Multiple Grounds
Single Form 843 can claim multiple grounds simultaneously

The timing question

Even when you qualify, you must request abatement within the statute of limitations: three years from the date the original return was filed, or two years from the date the penalty was paid, whichever is later. After that window, the refund is permanently forfeited. For COVID-era penalties, that window closes for most taxpayers on July 10, 2026.