Tax Dictionary – Penalty Relief Options

IRS Definition:

The following types of penalty relief are offered by the IRS:

  • Reasonable Cause
  • Administrative Waiver and First Time Penalty Abatement
  • Statutory Exception

More from H&R Block:

There are four reasons the IRS removes, or abates, penalties:

  1. IRS error: This must be an error that you can prove.
  2. Statutory exception to the penalty: This means that a rule of law provides an exception for the penalty.
  3. Administrative waiver: This allows the IRS to provide penalty relief (most common is the first-time penalty abatement waiver).
  4. For cause: That is, reasonable cause when you exercised ordinary business care and prudence, but because of circumstances outside of your control, you couldn’t comply with the law.

It’s important to understand that not all reasons apply to all penalties. For example, the administrative waiver for first-time penalty abatement doesn’t apply to return accuracy penalties.

Learn how to address IRS penalties.

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