How to Settle IRS Penalties for Good (Abatement Guide)

Introduction: IRS Penalties Add Up Fast — But You May Not Have to Pay Them
Late filing. Late payment. Estimated tax underpayment. Accuracy errors.
Individually, these might not seem major — but combined, IRS penalties can double your debt.
The good news: the IRS allows penalty relief — and many taxpayers qualify without even knowing it. With the right representation, you can remove or reduce IRS penalties with expert CPA help and avoid paying more than necessary.
This detailed guide to abatement strategies walks you through the 3 main IRS penalty relief programs, what to expect, and how Orange County residents can get penalties removed permanently.
✅ The Most Common IRS Penalties
Penalty Type | What It's For | Rate |
---|---|---|
Late Filing | Filed after deadline | 5% per month, up to 25% |
Late Payment | Paid after due date | 0.5% per month |
Estimated Tax | Didn’t pay quarterly | Varies |
Accuracy-Related | Math or deduction error | 20% of underpaid tax |
Fraud Penalty | Intentional underreporting | Up to 75% of tax owed |
✅ How to Get IRS Penalties Removed or Reduced
1. First-Time Penalty Abatement (FTA)
Fastest and easiest if you:
- Filed all past returns
- Haven’t had a penalty in the last 3 years
- Are otherwise in compliance
✅ Best for late filing or late payment
✅ Requestable by phone or mail
✅ A CPA can often get this approved in minutes
2. Reasonable Cause Abatement
This requires proof that something outside your control prevented timely filing or payment.
Examples:
- Medical emergency
- Natural disaster
- Death in the family
- Financial hardship
- Incorrect IRS advice
✅ Requires documentation
✅ Can be granted even if you’ve had penalties before
✅ Can apply to multiple years
Here, a tax professional can pair abatement with other relief options like Offers in Compromise or installment agreements for a more complete solution.
3. Statutory and Technical Relief
This includes:
- IRS processing errors
- Duplicate assessments
- Wrongfully assigned penalties
- Administrative issues you can prove
✅ These are less common but very real — and a CPA can often spot them in your IRS transcript.
✅ What Penalty Relief Does Not Do
- It doesn’t erase the actual tax owed
- It doesn’t stop interest from continuing to accrue
- It won’t be granted if you’ve ignored IRS notices or skipped required filings
For long-term results, your CPA can also outline compliance strategies to prevent penalties in the future, keeping your record clean.
🧠 Can You Get Penalty Relief with an Offer in Compromise?
Yes — when you submit an Offer in Compromise (OIC), the penalties and interest are usually included in the total debt being settled. You may also combine abatement with an affordable payment plan to resolve your balance in a way that fits your budget.
👉 How Much Will the IRS Usually Settle For?
📄 What You’ll Need to Apply
- IRS account transcript
- The IRS notice with penalty information (e.g., CP14, CP22A)
- Documentation for hardship (if requesting reasonable cause)
- Form 843 (Request for Abatement), if mailing
💡 Pro tip: Most FTA requests can be done over the phone. Reasonable cause requires stronger evidence.
🧭 How Boulanger CPA Helps Orange County Taxpayers
We help individuals and business owners in Irvine, Santa Ana, Anaheim, and Fullerton:
- Review penalty notices and transcripts
- Request first-time abatement by phone or mail
- Draft and submit reasonable cause letters
- Identify technical abatement opportunities
- Package Offers in Compromise to include penalties
📞 Call
657-218-5700
🌐
www.orangecounty.cpa
Frequently Asked Questions
What is IRS penalty abatement?
Penalty abatement is the IRS process for reducing or removing penalties if you meet certain eligibility requirements.
What penalties can be abated?
Common abatable penalties include failure-to-file, failure-to-pay, and accuracy-related penalties, though interest generally cannot be removed.
What are the requirements for first-time penalty abatement?
You must have a clean compliance history for the past three years and have filed all required tax returns to qualify.
Can I request abatement for reasonable cause?
Yes. If circumstances beyond your control caused the penalty—such as illness, disaster, or incorrect IRS advice—you may qualify for reasonable cause abatement.
How long does the penalty abatement process take?
The process can take several weeks to several months depending on the complexity of your case and the IRS workload.
How can a CPA help with IRS penalty abatement?
A CPA can prepare a compelling abatement request, provide supporting documentation, and negotiate directly with the IRS to maximize your chances of approval.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.
Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.