For years, the IRS has offered penalty relief to taxpayers with a strong compliance history who make honest mistakes. Known as First Time Abate (FTA), the program can remove certain failure-to-file, failure-to-pay, and failure-to-deposit penalties for taxpayers who were compliant during the previous three years. However, the relief was not automatic. Taxpayers had to request it after a penalty was assessed, leaving many eligible individuals unaware of the benefit or unable to navigate the process, especially unrepresented taxpayers or those with limited resources.

In a significant change to its penalty relief procedures, the IRS has announced a new Automatic Exemption from Penalty (AEP) program that will automatically waive certain penalties for eligible taxpayers with a strong compliance history. Announced in IR-2026-83, the program eliminates the need for taxpayers to request relief and is intended to replace the long-standing First Time Abate (FTA) program.

The AEP rollout will begin in summer 2026 for eligible 2025 individual returns and 2026 quarterly returns. It is scheduled to fully replace FTA for returns with original due dates on or after 1/1/27.

To dig deeper, visit the original article on the Thomson Reuters blog.