"Removing" a penalty means one of two things depending on timing, but the mechanism is the same either way: Form 843. If the penalty has not yet been paid, an approved request removes it from your account. If you already paid it, the same approval triggers a refund of the penalty and the interest that accrued on it. See Who Qualifies for the four grounds, and Form 843 for Penalty Abatement for how to complete the filing itself. This page covers what happens next.

The process, step by step

  1. Identify your grounds. First-Time Abatement, Reasonable Cause, a Statutory Exception, or an Administrative Waiver — see Who Qualifies. Multiple grounds can be cited on the same request.
  2. Authorize a representative and pull transcripts (Form 8821 or Form 2848), so the exact penalties, dates, and prior abatement history on the account are confirmed before filing.
  3. File Form 843 with the applicable IRC section and, for reasonable-cause claims, a written statement. Mailed only, wet signature required.
  4. Wait for the IRS to review the claim — typically 60 to 120 days.
  5. Receive the outcome. Approved requests remove the penalty and its interest, or issue a refund. Denied requests come with a written explanation and appeal rights.

If the request is denied

A denial is not final. The denial letter explains the decision and states your right to request a conference with the IRS Independent Office of Appeals — an office that reviews the case independently of whoever made the original decision, and can still grant the abatement. The letter states your specific deadline to request that conference; it is generally around 30 days from the date on the letter, but the exact number is printed on the notice and should be confirmed rather than assumed.

  • Disputes of $25,000 or less generally use the small-case process — Form 12203, Request for Appeals Review.
  • Larger disputes generally require a formal written protest: the facts, the law you're relying on, and supporting documents, sent to the address given on the denial notice.

An Appeals officer who denies the request issues a further written determination — commonly IRS Letter 1277 — which closes out the administrative appeal.

Last resort: court

If Appeals also denies the claim, the remaining option is a refund suit filed in a U.S. District Court or the U.S. Court of Federal Claims. Two federal deadlines govern this step, both under IRC §6532(a):

  • You generally cannot file suit until six months have passed since you filed the original Form 843 claim, unless the IRS decides it sooner (§6532(a)(1)).
  • Once the IRS mails a formal notice of disallowance, you have two years from that mailing date to file suit (§6532(a)(1)).
— A deadline trap worth knowing —

Asking Appeals to reconsider a disallowed claim does not pause the two-year court deadline — IRC §6532(a)(4) says so explicitly. A taxpayer who spends a year waiting on an informal reconsideration, then still disagrees, may find a shrinking window — or none at all — left to file suit. If a claim has already been formally disallowed and reconsideration is being requested, it is worth calendaring the two-year date independently rather than treating it as paused.

Filing Form
Form 843 (Claim for Refund and Request for Abatement)
Typical IRS Review Time
60 — 120 days
Appeals Request Deadline
Generally 30 days from the denial letter (confirm on your letter)
Small-Case Appeal Threshold
$25,000 or less — Form 12203
Larger Disputes
Over $25,000 — formal written protest
Court Deadline After Disallowance
2 years from the notice (IRC §6532(a)(1))

What if the IRS never responds?

Silence has a deadline too. If six months pass after filing Form 843 with no decision from the IRS, the same §6532(a)(1) provision that starts the court clock also permits filing suit at that point — you are not required to wait indefinitely for a response that never comes.