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What is First-Time Penalty Abatement (FTA), and How Can It Help You?

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If you’ve ever been hit with a penalty from the IRS, you know how stressful it can be. But did you know the IRS offers a one-time chance to get those penalties removed? This is called First-Time Penalty Abatement (FTA), and it could save you thousands of dollars. Let’s break down what it is and how it works.

What is First-Time Penalty Abatement (FTA), and How Can It Help You?

What is FTA? First-Time Penalty Abatement (FTA) is a program that allows the IRS to waive penalties for eligible taxpayers who’ve otherwise maintained a good compliance history. It’s specifically designed for penalties related to:

  • Failure to File (FTF)

  • Failure to Pay (FTP)

  • Failure to Deposit (FTD)

Who Qualifies for FTA? To qualify for FTA, you must meet these criteria:

  1. No prior penalties (except estimated tax penalties) in the past three years.

  2. Filing compliance for the year in question and the three prior years.

  3. The penalty must be for an original return, not a Substitute for Return (SFR).

A small business owner missed a payroll tax deposit due to a banking error and incurred a $3,000 penalty. Since they had a clean compliance history for the past three years, they applied for FTA and got the penalty waived in minutes over the phone.

How Arc&Ledger Can Help Not sure if you qualify? We can review your tax situation, guide you through the application process, and ensure the best chance of success. Contact us today.


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