Abatement refers to the reduction or elimination of penalties or interest that the IRS imposes on taxpayers for failing to comply with their tax obligations. The most common type is Penalty Abatement, which applies to penalties related to late filing, late payment, or failure to deposit taxes. Taxpayers can request abatement if they can demonstrate reasonable cause, such as illness, natural disasters, or reliance on incorrect professional advice.
The IRS offers First-Time Penalty Abatement (FTA) for taxpayers who have a clean compliance history for the past three years, allowing them to eliminate penalties without providing a specific reason. This is especially useful for individuals who are usually compliant but have missed a deadline due to unforeseen circumstances.
To apply for abatement, taxpayers need to submit a Form 843 (Claim for Refund and Request for Abatement) or make a formal written request. Along with the form, taxpayers must include a detailed explanation of why they failed to meet their tax obligations and any supporting documentation. The IRS evaluates each request on a case-by-case basis, and approval is not guaranteed. If successful, abatement can substantially reduce the overall tax liability by removing significant penalties and interest charges.