IRS Tax Relief and the 2026 penalty change

Until now, getting a first late penalty taken off meant calling the IRS or sending Form 843 to ask for First Time Abate. The IRS penalty relief page, last reviewed by the IRS on October 22, 2026, says First Time Abate is transitioning to a new program, Automatic Exemption from Penalty, starting summer 2026.

What changes

Under Automatic Exemption from Penalty, if you file or pay late in the current year but filed on time and paid the tax due for the three prior years, the IRS won't assess the penalty in the first place. Quarterly filers need 12 consecutive quarters. The IRS applies it when your original return finishes processing.

The IRS compares the two programs this way:

What's different	First Time Abate	Automatic Exemption from Penalty
How you get it	You contact the IRS and ask	The IRS applies it, with no action from you
What happens to the penalty	It's assessed first, then removed	It's never assessed
The late-payment penalty	May keep growing until the tax is paid	Doesn't accrue on the unpaid tax
Which returns	Prior years, plus 2025 returns and 2026 quarterlies not considered for the new program	2025 tax-year returns, 2026 quarterly returns, and later

Which returns and penalties it covers

The eligible returns are Forms 1040, 1065, and 1120, Forms 940, 941, 943, 944, and 945, and Form CT-1. The penalties covered are failure to file, failure to pay, and failure to deposit.

A timely compliance history means the same type of return was filed on time for the three prior years, and either no penalty was assessed, other than the estimated tax penalty, or a penalty was assessed and later removed for reasonable cause or IRS error. Businesses have a few extra conditions. The relief doesn't apply to returns filed once or infrequently, to the Daily Delinquency Penalty, or to information reporting that depends on another filing.

What you still owe

The tax itself stays. The IRS says you're still liable for any unpaid tax, the interest on it, and any penalty the program doesn't cover. Interest still builds on an unpaid balance, so a payment plan or another option may still be the next step.

What to do now

If you qualify, there's nothing to file. The IRS says you'll get a letter explaining that the penalties weren't assessed because of your history of timely compliance, and you don't need to respond to it. If you get a notice showing a penalty and you think you should have qualified, contact the IRS.

If you don't qualify, you can still ask for penalty relief based on reasonable cause, and the IRS will tell you its decision.

Pages we updated

Our guide to what to do when you owe the IRS and can't pay now covers the new program in its penalty relief section. If your balance came with a CP14, what a CP14 notice means covers that letter.