Get Free Money Back: Just Ask For a First Time Penalty Abatement
The IRS offers a penalty abatement on failure to file and failure to pay penalties on the first year of tax debts that you owe. This “First Time Penalty Abatement” is free money waiting to be asked for, but most people never ask for it (including many tax representatives that do not know about it). Request this when you are close to paying off the tax debt for the earliest year that you owe and just penalties remain.
The first time penalty abatement is the easiest way to get IRS tax debt forgiveness, but if you qualify for an Offer In Compromise, that’s often the best way to go.
You also can request this after you have paid a debt in full, but it must be requested within two years of paying off the penalty. The abated penalty money will be sent to you as a refund or applied to other tax debts if it already was paid off.
See our video explanation below or keep reading on for the written version.
Just follow these steps:
- Call (800) 829-1040 and get an IRS agent on the line.
- Say, “I would like to request a first time penalty abatement based on my prior compliance for tax year _____(insert appropriate year.”
- The agent will run a computer search over the three prior tax years to see if you have had any tax issues.
- If there are no prior tax issues, the agent will grant a penalty abatement. This will then come to you as a refund or be applied to other tax years you owe on
If They Won’t Do It Over The Phone, Write In Your Request
Sometimes the amount is too high for the agent to authorize. If they say that, you need to send a letter to the address where you normally file your tax returns. You can download a copy of the sample letter here or you can copy it below. The letter should state the following (Example is for 2008):
[Add Address of IRS where you normally file]
Re: Request for Penalty Abatement, 2008 Form 1040 Individual Taxes [Change to year you are requesting for], John Doe, Primary SSN# [Add your SSN]
Dear Sir or Madam,
For Tax Year 2008, Form 1040, I request that all failure to pay and failure to file penalties be abated based on the foregoing reasons. For the years 2005, 2006, and 2007 [adjust to whichever three years are prior to the year you are requesting for], no penalties were assessed on my account. Therefore, I should be entitled to an abatement of penalties based on their prior compliance.
Should any additional documentation or explanation be needed, please contact me at the above mailing address or by phone at [Instert your phone number]. Thank you for your consideration of this request.
Make sure to sign it and add a date. If you filed on time, you can take out the part about the failure to file penalty, but if you leave it in it does not matter, they still will proceed with abating the failure to pay penalty. Most of these requests will be for Form 1040. If a different tax debt, change it to the appropriate form. Send it certified mail with return receipt to the address you send your tax returns. Watch the savings roll in! In November of 2016, we saved one client over $30,000 using this method!