Don’t Let IRS Penalties Snowball — Here’s What You Need to Know About Tax Relief Options

Let’s be honest—no one likes dealing with the IRS. But what makes it worse? When penalties start piling up because of a missed filing deadline, a late payment, or just an honest mistake on your return.

In 2023 alone, the IRS assessed over $25.6 billion in additional taxes due to late filings—and collected $2.8 billion from delinquent tax returns. That’s a massive number. But here’s what most people don’t realize: you may not have to pay all of those penalties.

The IRS actually offers several penalty relief programs—you just have to know about them and take action. So if you’ve fallen behind on your taxes or received a penalty notice, this might be the break you’ve been hoping for.

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First-Time Penalty Abatement (FTA) – The “One-Time Free Pass”

If this is your first time getting hit with a tax penalty, you could be in luck. The First-Time Penalty Abatement (FTA) program is like a one-time “get out of jail free” card for eligible taxpayers. No long explanations. No piles of paperwork.

You qualify if:

• You haven’t had any penalties in the last 3 years (excluding estimated tax penalties).
  
• You’ve filed all required returns (even if they were late).
  
• You’ve taken care of your balance or made a plan to pay it off.
  

How to request it:

• Contact the IRS at 1-800-829-1040 for individuals or 1-800-829-4933 for businesses.
  
• Or file Form 843 to request it in writing.
  

Paid the penalty? You may receive a refund or future tax credit.

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Reasonable Cause Relief – Life Happens, and the IRS Knows It

Sometimes life just doesn’t go according to plan—maybe you got sick, lost a loved one, or dealt with a natural disaster. If something beyond your control caused you to miss a tax deadline, you might qualify for Reasonable Cause Relief.

What counts as a reasonable cause?

• A serious illness, accident, or death in the family
  
• Natural disasters, fires, or other unexpected events
  
• Incorrect advice from the IRS
  
• Military deployment, incarceration, or other unavoidable absences
  
• Financial hardship so severe that you couldn’t afford basic living expenses
  

What doesn’t count: “I forgot,” “I didn’t know,” or “I didn’t have the money”—unless you can show it was caused by something truly out of your control.

How to apply:

• Gather documents that back up your case (doctor’s notes, insurance claims, IRS letters, etc.)
  
• Submit Form 843 or call the IRS
  
• Clearly explain what happened, when it happened, and how you tried to fix it
  

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Statutory Exception Relief – When the IRS Messes Up

Believe it or not, the IRS isn’t perfect either. If you were penalized because of bad advice from them, or if a law protects you from a penalty, you might qualify for Statutory Exception Relief.

You may qualify if:

• The IRS gave you written advice that turned out to be wrong
  
• A tax law or IRS policy actually exempts you from the penalty
  
• The IRS made a processing error
  

Just make sure you can prove it with official documentation—letters, transcripts, or references to tax laws.

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Administrative Waivers – Special Exceptions and IRS Relief Programs

Every now and then, the IRS offers special relief to groups of taxpayers—like during the pandemic or after natural disasters. These are called Administrative Waivers, and sometimes the IRS even applies them automatically.

To check if one applies to you:

• Read your IRS notice carefully
  
• Visit IRS.gov for announcements
  
• Call the IRS to ask if there’s a waiver available for your situation
  

If not automatic, submit Form 843 with proof that the waiver applies to you.

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Installment Agreements – Spread Out Your Payments and Cut Penalties

Can’t pay your full tax bill right now? You don’t have to. The IRS offers Installment Agreements, allowing you to pay over time while potentially reducing penalties.

If you’re on an installment plan and making your payments on time, your failure-to-pay penalty gets cut in half, from 0.5% to 0.25% per month. It’s not full forgiveness, but it’s better than letting things snowball.

How to apply:

• File all required tax returns
  
• Apply online through the IRS Online Payment Agreement Tool
  
• Or submit Form 9465 by mail
  
• For larger debts (over $25,000), you may be required to set up auto-pay
  

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Offer in Compromise (OIC) – Reduce Your Tax Liability Legally

Now, this one is a big deal: If you genuinely can’t afford to pay, the IRS might settle your entire tax debt—including penalties—for less than what you owe. It’s called an Offer in Compromise (OIC).

But be warned—it’s not easy to get. The IRS only accepts about 40% of offers.

You may qualify if:

• Paying your full tax bill could lead to severe financial hardship.
  
• A full tax payment may be beyond your financial reach, even with a payment plan.
  
• You believe the IRS calculated your taxes incorrectly
  

How to apply:

• Use the OIC Pre-Qualifier Tool at IRS.gov
  
• Submit Form 656 and Form 433-A (OIC) or 433-B (OIC)
  
• Pay the $205 fee and make an initial payment (unless you qualify for a waiver)
  

While the IRS reviews your offer, penalties keep adding up—but collections usually pause during that time.

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Bottom Line: Don’t Wait — Tax Penalties Get Worse Over Time

IRS penalties aren’t just annoying—they grow fast and can lead to serious consequences like tax liens, levies, or wage garnishments. But here’s the good news: you have options. The sooner you act, the more likely you are to get relief and avoid even more stress down the road.

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Need Help? You’re Not Alone.

At Tax Law Advisory, we’ve helped thousands of individuals and businesses reduce or remove IRS penalties, negotiate payment plans, and avoid aggressive enforcement actions.

If you’ve received a penalty notice—or think one might be coming—don’t ignore it. Let our experienced tax attorneys step in, guide you through your options, and start working on your case right away.

Call us today. Your peace of mind is one conversation away.