IRS: Automatic penalty relief without needing to apply

The U.S. Internal Revenue Service (IRS) has announced a new, automatic process to provide penalty relief to qualifying taxpayers, eliminating the need for a formal application. This initiative aims to simplify tax compliance for individuals who have a consistent history of timely tax submissions and payments.

To be eligible for this automatic relief, taxpayers must have a record of filing and paying their taxes on time. Additionally, they must have settled any outstanding tax debts within the preceding three years, or over 12 consecutive quarters for quarterly filings. When taxpayers meet these criteria, penalties will not be applied during the processing of their returns.

The program, officially named Automatic Penalty Exemption (AEP), is set to begin this summer. It will apply to eligible original tax returns, starting with quarterly filings for the 2025 and 2026 tax years, as well as future fiscal periods. This new system is designed to replace the previous administrative mechanism known as First Time Abate (FTA).

IRS executives highlighted the program's intent to reduce the burden on compliant taxpayers. "The automatic penalty waiver reflects the IRS's commitment to simplifying and standardizing tax payments," stated Frank J. Bisignano, CEO of the IRS. "By automatically applying the penalty waiver, the IRS recognizes that taxpayers who historically pay on time should not have to formally request an exemption that is routinely granted."

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The automatic penalty waiver reflects the IRS's commitment to simplifying and standardizing tax payments. By automatically applying the penalty waiver, the IRS recognizes that taxpayers who historically pay on time should not have to formally request an exemption that is routinely granted.