If you’ve missed one or more tax filing deadlines, you’re not alone. Millions of taxpayers fall behind each year for reasons ranging from financial hardship to missing documents or sheer overwhelm.
The good news? The IRS actually wants you to get back into compliance — and offers several forms of penalty relief if you qualify. With the right approach (and timing), you may be able to file your past-due tax returns without penalty— or significantly reduce them.
Why Penalties Are Assessed for Late Filing?
When you miss a filing deadline, the IRS can assess two primary penalties — failure to file and failure to pay. Both can be reduced or eliminated if you act quickly and show a valid reason.
| Penalty Type | Rate | Maximum Amount |
|---|---|---|
| Failure to File | 5% of the unpaid taxes for each month or part of a month that a return is late | Capped at 25% of your unpaid taxes after five months |
| Failure to Pay | 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid | Capped at 25% of your unpaid taxes. The penalty can be reduced to 0.25% per month if you have an approved payment plan with the IRS. |
| Combined Limit | — | Max 5% per month (combined) |
📘 Reference:
Can You Avoid or Remove Penalties for Late Filing?
1️⃣ File on Time
Always file your return by the due date, even if you can’t pay the full tax bill.
2️⃣ Request an Extension to File
If you need more time to prepare your return, file for an extension, which will prevent a failure-to-file penalty. Remember, this is not an extension to pay.
📘 Reference: Form 4868
3️⃣ Pay as You Can
Pay as much of your tax bill as possible by the deadline to minimize the failure-to-pay penalty and accrued interest.
📘 Reference: IRS Make a Payment
4️⃣ Request a Payment Plan
If you can’t pay in full, consider applying for an installment agreement with the IRS, which can lower the failure-to-pay penalty rate and allow you to pay off your tax debt over time.
📘 Reference: IRS Installment Agreement
5️⃣ Request “First-Time Abatement” (FTA) (If You Qualify)
The First-Time Penalty Abatement (FTA) program offers a one-time waiver for failure-to-file, failure-to-pay, or failure-to-deposit penalties — if you meet eligibility requirements.
💡 Pro Tip: Many taxpayers qualify automatically for FTA without realizing it — the IRS may apply it if you call and request review.
📘 Reference: IRS FTA Policy
6️⃣ Prove “Reasonable Cause” for Late Filing (If You Qualify)
If you have a legitimate reason for filing late, such as illness, disaster, or reliance on a mistaken professional, you can request penalty relief for reasonable cause.
💡 Documentation Matters: Include supporting evidence showing you attempted to comply.
📘 Reference: Reasonable Cause Relief — IRS
7️⃣ Replace IRS Substitute for Return (SFR) With Your Own
If the IRS filed a Substitute for Return (SFR) on your behalf, you can file your own accurate return to replace it. Doing so can significantly reduce penalties and tax owed — especially if your true income and deductions differ.
💡 Note: Once your return replaces the SFR, the IRS recalculates your balance and adjusts penalties accordingly — often reducing them by thousands.
📘 Reference: Understanding Your CP2566 Notice
How a Tax Attorney Can Help You Remove Penalties?
IRS penalty abatement requests often succeed when handled by experienced professionals who know the right language and documentation standards. A tax attorney can help you:
| Action | Outcome |
|---|---|
| Analyze your IRS transcripts | Identify all penalty codes and relief opportunities |
| Prepare abatement request | Draft legal argument citing IRS Code & IRM authority |
| Communicate with IRS agents | Handle negotiations directly with penalty appeal units |
| File appeals for denied requests | Use the Collection Appeals Program (CAP) or CDP Hearings |
| Prevent future penalties | Set up compliance systems and installment agreements |
📘 References: Form 2848 — Power of Attorney and Declaration of Representative
Need help with a similar issue? Contact our firm today for a consultation.
The IRS penalizes late filers — but it also provides clear, legal pathways to relief. If you act before enforcement begins, you can often file your past-due tax returns without penalty or significantly reduce them through First-Time Abatement or Reasonable Cause Relief.
If you’ve received IRS notices or want to catch up safely, contact Pelham PLLC today. Our tax attorneys help clients file old returns, remove penalties, and negotiate with the IRS for a clean slate — legally and efficiently.
FAQs
Does the IRS automatically remove penalties?
Not usually — you must formally request it.
Can interest be removed too?
Interest can only be reduced if it stems from abated penalties or IRS errors — not just late payment.
