IRS Failure-to-File vs Failure-to-Pay Penalties: How to Get Them Removed

Many taxpayers do not realize that the IRS can charge separate penalties for filing a tax return late and paying taxes late. These IRS penalty types can quickly increase the amount you owe if they are not addressed. Understanding the difference between them is the first step toward finding the right solution, whether you need IRS failure to file penalty abatement or IRS failure to pay penalty removal.

This guide explains how these penalties are calculated and how to remove IRS penalties through the relief options available.

Key Takeaways • Understand the difference between failure-to-file and failure-to-pay penalties to choose the right strategy for IRS failure to file penalty abatement or IRS failure to pay penalty removal. • The failure-to-file penalty is generally much higher than the failure-to-pay penalty, making it important to file your tax return on time even if you cannot pay in full. • The IRS may charge both penalties at the same time, but eligible taxpayers can request IRS penalty relief to reduce or remove these charges. • Several forms of IRS penalty relief are available, including First-Time Penalty Abatement, reasonable cause relief, and statutory exception relief. • Supporting documentation plays a key role in a successful penalty abatement request, especially for reasonable cause claims. • If penalty abatement is denied, other IRS tax resolution services, such as an Installment Agreement or Offer in Compromise, may still help resolve your tax debt.

Understanding IRS Tax Penalties

The IRS charges penalties when you do not file your tax returns or pay your taxes on time. These penalties, along with interest, can add up quickly and significantly increase your total tax debt, making it harder to catch up if left unresolved.

Understanding different IRS penalty types can help you take the right steps to fix the issue early and reduce what you owe. Depending on your situation, you may qualify for IRS penalty relief, including IRS failure to file penalty abatement or IRS failure to pay penalty removal, which can reduce or eliminate penalties and lower your overall tax bill. Knowing how to remove IRS penalties through proper IRS tax resolution services can help you manage your debt more effectively.

Why the IRS Assesses Penalties

The IRS charges penalties to encourage taxpayers to file their tax returns and pay their taxes on time. If you miss a filing deadline or fail to pay the amount due, the IRS may add penalties because your tax obligations were not met.

Along with these penalties, the IRS also charges interest on any unpaid tax balance, causing your debt to grow over time. Learning how to remove IRS penalties and exploring available IRS penalty relief options as early as possible may help reduce the total amount you owe and make resolving your tax debt easier.

The Most Common IRS Penalty Types

Among the different IRS penalty types, the two most common are the Failure-to-File Penalty and the Failure-to-Pay Penalty. Many taxpayers face one or both of these penalties after missing important IRS deadlines.

• Failure-to-File Penalty: This penalty is charged when you do not file your tax return by the required due date, even if you cannot pay the taxes you owe.
• Failure-to-Pay Penalty: This penalty applies when you file your return but do not pay the full tax balance by the deadline.

Both penalties can be added to your account at the same time, causing your tax debt to grow faster. The good news is that many taxpayers may qualify for IRS penalty relief, including IRS failure to file penalty abatement or IRS failure to pay penalty removal, if they meet the IRS eligibility requirements.

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What Is the IRS Failure-to-File Penalty?

Understanding when the penalty applies is the first step toward qualifying for IRS failure to file penalty abatement. The IRS charges a failure-to-file penalty when you do not submit your federal tax return by the original due date or by the extended deadline if you received an approved filing extension.

Even if you cannot pay the taxes you owe, it is usually better to file your return on time. Filing late can result in additional penalties that increase your total tax debt and make it more difficult to resolve.

When the Failure-to-File Penalty Applies

The IRS generally charges the Failure-to-File Penalty if you do not submit your tax return by the due date or by the extended deadline if you received an approved extension. Knowing when this penalty applies is important if you plan to request IRS failure to file penalty abatement.

This penalty can apply to individual and business tax returns, as well as other required IRS filings. Keep in mind that a filing extension only gives you more time to file your return it does not give you more time to pay your taxes. If you do not pay the amount owed by the original deadline, the IRS may still charge a Failure-to-Pay Penalty, even if your extension was approved.

How the IRS Calculates Failure-to-File Penalties

The IRS calculates the Failure-to-File Penalty based on the amount of unpaid tax on your return. In most cases, the penalty is 5% of the unpaid tax for each month, or part of a month, that your return is late, up to a maximum of 25% of the unpaid tax.

If your return is filed more than 60 days after the due date, the IRS may also charge a minimum penalty. For tax returns required to be filed in 2025, that minimum is generally $510 or 100% of the unpaid tax, whichever is less. Understanding how the penalty is calculated can help you determine whether you may qualify for IRS failure to file penalty abatement and reduce the amount you owe.

Examples of Failure-to-File Penalty Charges

Unpaid Tax	Months Late	Penalty Rate	Penalty Amount
$5,000	1 month	5%	$250
$5,000	3 months	15%	$750
$5,000	5+ months	25% (cap)	$1,250

As these examples show, failure-to-file penalties can grow quickly over time. Understanding how they are calculated can help you determine whether you qualify for IRS penalty abatement. 

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What Is the IRS Failure-to-Pay Penalty?

The IRS charges a Failure-to-Pay Penalty when you do not pay the full amount of tax you owe by the due date, even if you file your tax return on time. Understanding when this penalty applies is the first step toward qualifying for IRS failure to pay penalty removal.

Many taxpayers think that filing their return on time is enough to avoid penalties. However, if any tax balance remains unpaid after the deadline, the IRS may begin adding a Failure-to-Pay Penalty along with interest. Knowing how this penalty works can help you take action early and reduce the amount you owe.

When the Failure-to-Pay Penalty Applies

The Failure-to-Pay Penalty usually begins the day after the tax payment due date if you have not paid the full amount you owe. Understanding when this penalty starts is important if you are seeking IRS failure to pay penalty removal.

This penalty can apply to any unpaid tax balance, including individual income tax, self-employment tax, and additional taxes assessed by the IRS after an audit. Even if you file your tax return on time, not paying the full amount by the deadline may result in a Failure-to-Pay Penalty and interest being added to your account.

How Failure-to-Pay Penalties Are Calculated

The IRS generally calculates the failure-to-pay penalty at 0.5% of your unpaid tax balance for each month, or part of a month, that the tax remains unpaid. The penalty can continue to increase until it reaches a maximum of 25% of the unpaid amount.

If both the failure-to-file and failure-to-pay penalties apply during the same month, the IRS reduces the failure-to-file penalty from 5% to 4.5%, while the failure-to-pay penalty remains 0.5%. This keeps the combined monthly penalty at 5%. Understanding these IRS penalty types can help you determine whether you may qualify for IRS failure to pay penalty removal or other forms of IRS penalty relief.

Impact of Ongoing Nonpayment

Ignoring IRS notices and leaving your tax debt unpaid can make your situation much more costly. If you do not pay your taxes or set up an approved payment plan, the Failure-to-Pay Penalty rate may increase to 1% per month after the IRS issues a final notice of intent to levy.

As penalties and interest continue to accumulate, your total tax debt can grow quickly. Taking action early and understanding how to remove IRS penalties may help reduce additional charges and keep your tax situation from becoming more difficult to manage.

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Failure-to-File vs Failure-to-Pay: Key Differences

While both penalties can increase your tax debt, they have different rules, rates, and deadlines. The table below compares the key differences between the Failure-to-File Penalty and the Failure-to-Pay Penalty. 

Feature	Failure-to-File	Failure-to-Pay
Monthly Rate	5% per month	0.5% per month
Maximum Penalty	25% of unpaid tax	25% of unpaid tax
When It Starts	Day after filing deadline	Day after payment deadline
Minimum Charge	$510 or 100% if 60+ days late	No flat minimum
Can It Be Removed?	Yes, via abatement	Yes, via abatement

Understanding these differences can help you identify which penalty applies to your situation and explore the best relief options. In many cases, taxpayers may be eligible to have these penalties reduced or removed by meeting the IRS requirements for penalty abatement. 

Which Penalty Is More Expensive?

In most cases, the Failure-to-File Penalty is much more expensive than the Failure-to-Pay Penalty. The Failure-to-File Penalty is generally 5% of the unpaid tax per month, while the Failure-to-Pay Penalty is usually 0.5% per month. As a result, the filing penalty can grow much faster and significantly increase your tax debt.

If you cannot afford to pay your full tax bill, it is still important to file your tax return on time. Filing on time can help you avoid the larger Failure-to-File Penalty and may improve your chances of qualifying for IRS failure to pay penalty removal or other forms of IRS penalty relief.

Can Both Penalties Apply at the Same Time?

Yes. The IRS can charge both the Failure-to-File Penalty and the Failure-to-Pay Penalty if you file your tax return late and do not pay the taxes you owe. Although these are separate IRS penalty types, the IRS adjusts the calculation when both apply in the same month so that the combined monthly penalty rate remains 5%.

If you qualify, you may be eligible for IRS failure to file penalty abatement or other forms of IRS penalty relief. These programs can reduce or even remove certain penalties, helping lower your overall tax debt.

How Interest Accumulates on Both Penalties

The IRS charges interest on unpaid taxes and certain penalties, and that interest is calculated daily until your balance is paid in full. As interest continues to accrue, your total tax debt can increase over time. If a penalty is successfully removed through penalty abatement, the interest related to that penalty is generally removed as well, helping reduce the overall amount you owe. 

IRS Penalty Abatement: What It Means

IRS penalty abatement is the process of asking the IRS to reduce or remove penalties charged to your tax account. If your request is approved, the IRS may also remove the interest that accumulated on those penalties, lowering your overall tax debt.

Penalty abatement is not automatic. You must request it and meet the IRS eligibility requirements, such as qualifying for First-Time Penalty Abatement or demonstrating reasonable cause for filing or paying late.

How IRS Penalty Relief Works

The IRS offers penalty relief through three main options, which are First-Time Penalty Abatement (FTA), reasonable cause, and statutory exception. Depending on your situation, you can request relief by calling the IRS, sending a written request, or submitting Form 843.

Before approving a request, the IRS reviews your filing history, payment compliance, and the reason for the penalty to determine whether you qualify for relief. If you meet the eligibility requirements, the IRS may reduce or remove some or all of your penalties.

Penalties Eligible for Abatement

The IRS may allow penalty abatement for several types of tax penalties, depending on your eligibility and circumstances. Some of the most common penalties that may qualify include:

• Failure-to-File Penalty (IRC Section 6651(a)(1))
• Failure-to-Pay Penalty (IRC Section 6651(a)(2))
• Failure-to-Deposit Penalty (IRC Section 6656)
• Estimated Tax Penalties in certain qualifying situations

The type of penalty you owe and the reason it was assessed will determine whether you qualify for penalty relief or abatement.

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Option #1: First-Time Penalty Abatement (FTA)

First-Time Penalty Abatement (FTA) is a type of IRS penalty relief for taxpayers with a clean compliance history. It may allow penalties to be removed without needing to explain why you filed or paid late. To qualify, you must meet IRS requirements, including having no recent filing or payment issues.

 Eligibility Requirements for First-Time Abatement

To qualify for First-Time Penalty Abatement (FTA), you must meet all of the following requirements:

• You have not received any significant IRS penalties during the previous three tax years, excluding estimated tax penalties.
• You have filed all required tax returns or have a valid filing extension in place.
• You have paid your tax balance in full or have an active payment plan with the IRS.

If you meet these conditions, you may be eligible to have certain IRS penalties reduced or removed through the First-Time Penalty Abatement program.

Penalties Covered Under FTA

First-Time Penalty Abatement (FTA) can remove both the Failure-to-File Penalty and the Failure-to-Pay Penalty for one eligible tax year. If you meet the IRS requirements, your request may be approved quickly, and in some cases, you may be able to obtain relief with a simple phone call to the IRS.  

Common Reasons FTA Requests Are Approved

Most successful First-Time Penalty Abatement (FTA) requests involve taxpayers who meet the following requirements:

• Have a clean penalty history for the previous three tax years.
• Have filed all required tax returns or obtained a valid filing extension.
• Have paid their tax balance in full or entered into an approved IRS payment agreement.
• Have not previously received First-Time Penalty Abatement for the same tax year.

Meeting these conditions can improve your chances of having eligible IRS penalties removed through the FTA program.

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Option #2: Reasonable Cause Penalty Relief

If you don’t qualify for First-Time Penalty Abatement (FTA), you may still get IRS penalty relief by showing reasonable cause. This means proving that serious situations like illness, natural disasters, or other unexpected events prevented you from filing or paying on time, even though you tried to meet your tax obligations. 

What Qualifies as Reasonable Cause?

The IRS reviews each reasonable cause request based on your individual circumstances and the supporting documentation you provide. Some common situations that may qualify include:

• Serious illness or incapacity of you or an immediate family member
• Death of a close family member near the tax filing or payment deadline
• Natural disasters that prevented you from filing or accessing your tax records
• Unavoidable absence from the country during the filing period
• Reliance on incorrect written advice from the IRS or a qualified tax professional

Providing clear evidence that these circumstances prevented you from meeting your tax obligations can improve your chances of receiving penalty relief.

 Medical Emergencies and Natural Disasters

Serious medical emergencies like hospitalization, surgery, or long-term illness that prevent you from managing your taxes may qualify you for IRS penalty relief. You may also qualify if you were affected by an IRS-recognized natural disaster. Keep supporting documents such as hospital records, medical bills, or disaster-related proof to strengthen your request for IRS failure to file penalty abatement.

Records Destruction and Other Circumstances

If your tax records were destroyed due to a fire, flood, or another unexpected event, you may qualify for IRS penalty relief. You must show that the records were lost and that you made reasonable efforts to recover or recreate them before the deadline.

Providing proof of the event and your recovery efforts can strengthen your request for IRS failure to file penalty abatement and improve your chances of approval. 

Option #3: Statutory Exception Relief

Statutory Exception Relief is another way to request IRS penalty removal in specific situations. It may apply if you relied on incorrect written advice from the IRS or if a provision in the tax law allows penalty relief based on your circumstances.  

IRS Errors and Incorrect Advice

If you followed written advice from the IRS that later turned out to be wrong, you may qualify for IRS penalty relief. You must show that you gave correct information and received the advice in writing. In most cases, verbal advice from an IRS agent is not enough, so written proof is important for IRS failure to file penalty abatement requests.

Situations Where Statutory Relief Applies

You may qualify for statutory penalty relief in situations such as:

• You relied on a written determination or official notice from the IRS.
• An IRS processing error caused a delay in handling your return or payment.
• Your case qualifies for a specific exception under the Internal Revenue Code.
• The penalty was assessed while you were serving in a designated combat zone as a member of the military.

How to Request IRS Penalty Abatement

You can request IRS failure to file penalty abatement by calling the IRS, sending a written request letter, or submitting Form 843. The best method depends on your situation and the documents you can provide. A clear explanation and proper records can improve your chances of getting IRS penalty relief and reducing your overall tax penalties.

Requesting Relief by Phone

For simple First-Time Penalty Abatement (FTA) cases, calling the IRS is often the fastest option. You can call the number listed on your IRS notice, ask the representative to review your account for FTA eligibility, and request penalty removal. In many straightforward cases, the issue can be resolved during the same phone call if you meet the requirements.

Filing Form 843 for Penalty Relief

Form 843 (Claim for Refund and Request for Abatement) is the official IRS form for penalty abatement requests. Use it when:

• You already paid the penalty and want a refund
• Your case involves reasonable cause or statutory exception
• You want a written record of your request on file

Mail Form 843 to the IRS service center that handles your account, along with a written statement explaining why the penalty should be removed.

Supporting Documentation Needed

• Medical records or a doctor’s letter for illness-based claims
• FEMA documents or insurance records for disaster-based claims
• IRS transcripts showing your clean penalty history for the prior three years (FTA)
• Copies of written IRS correspondence you relied on (statutory exception)
• Proof that all returns are filed and any balance is in a payment arrangement

What Happens If Your Penalty Relief Request Is Denied?

A denial does not mean your case is closed. The IRS may reject penalty relief requests for reasons such as missing documents, incomplete information, or not meeting eligibility requirements. In many cases, these issues can be corrected and resubmitted through the appeals process. 

IRS Appeals Process

If the IRS denies your request, you have 60 days to file a written protest with the IRS Office of Appeals. Appeals officers review cases independently from the examiner who made the original decision. A well-prepared appeal with full documentation gives you a strong chance of getting IRS failure to file penalty abatement approved on the second attempt.

Additional Tax Resolution Options

If abatement alone does not solve your situation, other IRS tax resolution services can help reduce the overall amount you owe:

• Installment Agreement: Pay your balance in monthly payments over time
• Offer in Compromise: Settle your tax debt for less than the full amount
• Currently Not Collectible Status: Pause IRS collection if you cannot pay
• Innocent Spouse Relief: Separate your tax liability from a former spouse’s errors

The right solution depends on your financial situation and the amount you owe. Reviewing all available tax resolution options can help you choose the most effective path to resolving your IRS debt. 

How Hall and Associates Tax Relief Helps Remove IRS Penalties

Hall and Associates Tax Relief reviews every client’s penalty situation from multiple angles. We pull your IRS account transcripts, check your compliance history, and look at the specific facts behind each penalty to find the strongest grounds for relief.

Penalty Abatement Evaluation

We begin with a full review of your IRS transcripts to identify the penalties on your account, determine which abatement options apply, and understand what documentation is needed for your case. This evaluation helps build a strong foundation for your IRS failure to pay penalty removal strategy. 

Strategic IRS Negotiations and Appeals

Our team manages all communication with the IRS, from the initial abatement request through any appeals if the first attempt is denied. We understand how to remove IRS penalties and work to pursue every available option to resolve your account.

Conclusion

IRS failure-to-file and failure-to-pay penalties can quickly increase your total tax debt if they are not addressed. Understanding your relief options and taking action early can help reduce penalties, limit interest, and improve your overall financial situation.

If you need help, Hall and Associates Tax Relief can review your case, identify the best penalty relief strategy, and communicate directly with the IRS on your behalf. Our experienced team can guide you through the process and help you work toward the most effective resolution for your situation.

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