The first-time penalty abatement (FTA) letter is an administrative waiver that the IRS may grant to relieve taxpayers from failure-to-file, failure-to-pay, and failure-to-deposit penalties if certain criteria are met.
Easy format for the IRS to process
Internal Revenue Manual citations to substantiate penalty relief
Can help practitioners bill more for their work; often clients find value in a letter or form to illustrate the work that was performed
The policy behind this procedure is to reward taxpayers for having a clean compliance history; everyone is entitled to one mistake. Individuals and businesses may request FTA for any failure-to-file, failure-to-pay, or failure-to-deposit penalty; FTA does not apply to other types of penalties such as the accuracy-related penalty.