If you missed last week’s extended tax filing deadline, you might be feeling anxious about getting hit with late-filing penalties by the IRS. However, if you don’t have a recent history of filing your taxes late, it’s possible to apply for something called a first-time penalty abatement, which will waive some of your penalties. Here’s a look at how you can apply.
How the IRS’ late fees work
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First off, if you are expecting a refund, there’s no penalty for filing late; however, if you owe taxes and missed the May 17 deadline without requesting an extension, you should file quickly to limit penalties and interest.
Typically, late tax filers owe a failure-to-file penalty—5% of your unpaid tax balance per month. But if you file more than 60 days after the tax filing deadline, your penalty becomes the lesser of $435 or 100% of your unpaid tax balance. If you filed on time but couldn’t afford to pay your taxes, the penalty is much smaller, at 0.5% of your unpaid balance per month.
Note that some taxpayers may have extra time to file their tax returns and pay any taxes due, including disaster victims, taxpayers living overseas, military service members, and eligible support personnel in combat zones.
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A first-time penalty abatement will waive late fees
Now for the good news: If you have a history of filing and paying your taxes on time, the IRS may be willing to waive those penalties through a first-time penalty abatement, along with the interest accruing on your penalty. The agency may also offer penalty relief for a reasonable cause—which includes things like natural disasters, no access to your records, or a family member’s death or illness.
To qualify for the first-time penalty abatement, you’ll need to meet the following criteria:
- Three years of on-time filing and tax payments
- You filed all currently required returns or filed for an extension of time to file
- That you have paid—or have arranged to pay—any money you owe
How to apply for a first-time penalty abatement
If you have received a failure-to-file notice from the IRS, look for the toll-free number in the top right-hand corner and call the agency to see if you qualify for relief through abatement or another waiver. (The lines are often busy, so check out this Lifehacker post about getting routed to an agent).
Alternatively, if you prefer to put the request in writing, you may also contact the IRS by mail—but it may take up to 30 days to get a response. Also, another tip: You might improve your chances of relief by making the request after paying your tax balance. If you received a notice or letter stating that the IRS didn’t grant your request for penalty relief, you may want to use the Penalty Appeal Online Self-help Tool.
This story was originally published August 7, 2020 and updated on May 27, 2021 with additional information.