Penalty abatement request letter sample (first-time relief)

When to use this letter

Use this when you have received a penalty and your record is otherwise clean. The IRS's administrative relief, often called first-time abatement, is based on a clean three-year compliance history for the same return type. Earlier penalties must be absent or removed for reasonable cause or IRS error. It applies to certain failure-to-file, failure-to-pay and failure-to-deposit penalties, not accuracy-related penalties.

The scenario here is a household employer who filed a single payroll return late after years of filing on time. The tone is short, courteous and history-focused, unlike a reasonable cause statement, which tells a story about what happened.

Look first at which penalty is on your notice and which return it relates to. The name of the penalty and the return type are what decide whether administrative relief fits. If the penalty is of a type the IRS page does not list, this letter is the wrong tool, and you should read the IRS page for that penalty before writing.

What the IRS says about asking

The IRS says you can ask by calling the number on the notice or by sending a written statement or Form 843. You do not have to name first-time abatement; the IRS considers the relief that fits. If you do not qualify for administrative relief, reasonable cause is the fallback, so it is sensible to preserve it by adding a sentence about circumstances if any apply.

If the IRS removes the penalty, related interest is reduced or removed with it. The estimated tax penalty is an exception and is not eligible for reasonable cause relief.

How to adapt it

Fill in the penalty type exactly as it appears on the notice, and the tax period. List the returns you filed for the preceding periods in plain sentences, without adding anything you cannot document. If you had a penalty in an earlier year, say what happened to it.

Leave out emotion and explanations of how unfair the penalty is. A reviewer is checking for history and eligibility.

Be accurate about the history you claim. If you are unsure whether an earlier year had a penalty, look at your IRS account records or a tax account transcript before you write that you had none; a statement that turns out to be wrong undercuts the rest of the request. If you are asking for relief on more than one return or period, consider a separate letter for each so that each can be matched to its own notice.

The compliance history paragraph is the core of the letter. Write it as a list of facts that someone could verify against IRS records: each return, filed on time, with tax paid or an arrangement in place. The what-happened paragraph should be only a sentence or two. If the facts suggest a stronger story, such as a serious illness or a disaster, consider the separate reasonable cause route and read the IRS page on it before deciding what to emphasize.

What to attach

Keep the package small.

Label each attachment with the notice number and tax period, and put them in the same order as the enclosure list at the bottom of the letter. If you also owe the tax itself, resolving that is a separate step. The IRS says that interest is reduced or removed only along with the penalty, so a request for relief does not change what you owe in tax. Check your notice for how to pay or set up a payment arrangement while the request is pending.

• Form 843, if you are using it, completed and signed
• A copy of the penalty notice
• Copies of any notice showing earlier penalties and their outcome
• Proof of the filing or payment you made once you did
• Any supporting records for circumstances you mention

After you send it

The IRS will reply in writing. If a failure-to-file or failure-to-pay penalty relief request is denied, the IRS describes an appeal process that starts with the letter giving appeal rights; follow the date in that letter. IRS Audit Defense Pro is software that helps you organize your facts and draft a response letter you review and send yourself. It is not a law firm, CPA or enrolled agent, and it gives no legal or tax advice.

Keep a copy of the complete request with the date mailed. If you get a reply by phone, write down the date, the name or ID the caller gave, and what was said, then confirm the outcome in writing if you can. If the IRS grants relief, keep the letter showing it in your records, because it is part of your compliance history for any future request.

The sample letter

Adjust it to match your notice.

Sample letter

This is a general template with placeholders. Replace everything in square brackets with your own details, and check it against the instructions on your notice.

[YOUR FULL NAME OR BUSINESS NAME]
[YOUR STREET ADDRESS]
[CITY, STATE ZIP]
[DAYTIME PHONE]

[DATE]

Internal Revenue Service
[ADDRESS ON YOUR PENALTY NOTICE]

RE: Request for penalty relief
Notice [NOTICE NUMBER] dated [NOTICE DATE]
Taxpayer identification number (last four digits): [LAST FOUR]
Return type: [FORM NUMBER, FOR EXAMPLE FORM 1040 OR FORM 941]
Tax period: [TAX PERIOD]
Penalty: [PENALTY TYPE AS SHOWN ON NOTICE]

To the Reviewer:

I am writing to request removal of the penalty described above. I ask that you consider administrative penalty relief based on my compliance history, and, if that does not apply, relief for reasonable cause.

Compliance history. For the [NUMBER OF PRIOR YEARS OR QUARTERS] periods before [TAX PERIOD], I filed every required [RETURN TYPE] return on time. I [PAID ALL TAX DUE ON OR BEFORE THE DUE DATE OR HAVE AN ARRANGEMENT IN PLACE]. I have not been assessed a penalty of this type in those periods [OR DESCRIBE THE ONE EARLIER PENALTY AND HOW IT WAS RESOLVED].

What happened. [ONE OR TWO FACTUAL SENTENCES, FOR EXAMPLE: THE RETURN WAS FILED LATE BECAUSE OF AN ADMINISTRATIVE OVERSIGHT.] I filed [OR PAID] on [DATE FILED OR PAID] as soon as I discovered the issue.

I have enclosed a copy of the notice and the supporting records listed below. If you need further information, please write to me at the address above or call the number shown. I would appreciate a written reply.

Sincerely,

[SIGNATURE]
[YOUR FULL NAME AND TITLE, IF A BUSINESS]

Enclosures:
1. Copy of notice [NOTICE NUMBER]
2. [DESCRIBE ITEM: FORM 843, IF USED]
3. [DESCRIBE ITEM: PROOF OF FILING OR PAYMENT]
4. [DESCRIBE ITEM: EARLIER NOTICE AND OUTCOME, IF ANY]

Frequently asked questions

Sources

• IRS: Administrative penalty relief
• IRS: About Form 843
• IRS Appeals: Penalty appeal

Related guides

• How to request penalty abatement from the IRSStart by checking whether your penalty qualifies for administrative relief based on a clean compliance history.
• Reasonable cause statement sample: telling the story of what happenedA reasonable cause statement explains, in dated order, what prevented you from meeting a requirement, how you tried to act with ordinary care and prudence, and what you did once the problem ended.
• Why you were charged an underpayment penalty, and what to checkThe underpayment of estimated tax penalty applies when you did not pay enough tax during the year through withholding or estimated payments, even if you paid the full balance at filing.
• You missed an IRS response date: what to do nextContact the IRS using the number or address on your notice as soon as you notice the date passed.
• What a CP14 notice means and what to do nextA CP14 is the IRS balance-due notice.
• Behind on filing? Here is how past-due returns workThe IRS says to file every past-due return now, even if you cannot pay in full, rather than waiting to hear from it.