First Time Abate eligibility checker

The criteria the IRS applies

First Time Abate is an administrative waiver, not reasonable cause, and it lives in IRM 20.1.1.3.3.2.1. It removes the failure-to-file, failure-to-pay and failure-to-deposit penalties for a single tax period when the taxpayer's history is clean. The checker asks the questions in the order the IRM applies them:

• Penalty and return. Only the penalties listed above qualify. Returns with an event-based filing requirement and filings that depend on another return are excluded, with the Form 1099 series, Forms 706, 709, 990, 8300, 3520, 3520-A, 5471 and 5472 named as examples. Information return penalties on Forms 1099 go through reasonable cause instead (for payers, see the relief order for information return penalties).
• Three-year look-back. The same return was filed for the three preceding periods (or none was required), those returns have no unreversed penalties other than an estimated tax penalty with a notice issued, and none had a penalty removed under FTA or tolerance (penalty reason codes 018, 020, 021). For Forms 941 and 944, the IRM treats MFT 01 and 14 together; for Form 1040, MFT 30 and 31.
• Business extras. Four or more FTD penalty waiver codes in the history, or a late Form 1120 or 1120-S that was not penalized, defeat the waiver.
• One period only. “An FTA waiver is not penalty-specific,” but it reaches only one period: if all four quarters of 2016 Forms 941 carry FTD penalties, only the first quarter can get FTA, and the IRM adds that “the FTA waiver is not applicable based solely on a taxpayer’s first request for penalty relief.”

IRS error comes first. If the penalty is wrong, or the taxpayer in fact complied, the IRM tells employees not to use FTA and to correct the account (penalty reason code 045). That keeps the waiver available for a later year.

AEP: when the relief should have been automatic

The IRS First Time Abate page (reviewed October 2026) says FTA “is transitioning to a new relief called Automatic Exemption from Penalty (AEP), starting Summer 2026”. The checker's tax period question applies the IRS's own cut-off: AEP covers Forms 1040, 1065 and 1120, Forms 940 through 945 and Form CT-1, for “2025 tax year returns, and subsequent” and “2026 quarterly returns, and subsequent”. The qualification test is the same timely compliance history as FTA: the same return type filed timely for the prior three years (or 12 consecutive quarters), no penalty other than estimated tax assessed in those years unless later abated for reasonable cause or IRS error, and for business taxpayers no four-or-more FTD waivers and no EFTPS-avoidance FTD penalty. The difference is mechanical: “AEP is applied when your original return completes processing,” “The IRS won’t assess penalties for failure to file, failure to pay, or failure to make a deposit,” a letter explains that the penalties were not assessed, and “You don’t need to contact the IRS or respond to the notice.” The IRS comparison table adds that under AEP the failure-to-pay penalty “Does not accrue and is not assessed on unpaid tax,” where FTA abates only what has accrued and the penalty keeps running until the tax is paid.

So when the checker flags an AEP period with a clean history, a penalty on the notice means the system did not apply the exemption, and the page's instruction is: “If you receive a notice showing an assessed penalty but believe you should have qualified for this relief, contact us.” Call the number on the notice first; the FTA letter is the fallback. Forms 1120-S, 1041 and the other return types the checker accepts are not on the IRS's AEP list, so those penalties are still requested under FTA. Earlier periods, whatever the form, stay under FTA.

Order of relief and how to ask

The IRS considers administrative waivers, including FTA, before reasonable cause. When FTA applies, the IRS removes the penalty on compliance history and says so in its letter, even if a reasonable cause statement was sent. “Taxpayers are not required to specifically request penalty relief under the FTA waiver to be eligible for the waiver,” and the waiver has no oral statement authority threshold, so it can be granted on a phone call; see penalty abatement by phone. In writing, use Form 843 or a letter; the FTA request letter template lays out the facts the IRM checks. For the 2019 and 2020 tax years, failure-to-file penalties relieved under Notice 2022-36 and prior FTA relief for those penalties granted on or before September 30, 2022 are disregarded in the look-back (IRM 20.1.1.3.3.2.2).

The answer here is only as good as the history behind it. The IRS's Reasonable Cause Assistant checks a limited set of modules, and the IRM tells employees to verify secondary and cross-reference TINs by hand, so pull the three prior years' account transcripts before relying on a yes. The transcript code decoder explains the penalty and abatement codes, and the First Time Abate guide covers the full procedure.

Questions practitioners ask