Video · Brian Kim
How to Get the IRS to Forgive Your Penalties and Interest - Tax Hack
Brian explains the three ways the IRS actually abates penalties — First-Time Abatement, Reasonable Cause, and Statutory Exceptions — and why interest relief is rare.
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Published on YouTube July 26, 2019 · 7:53 · Text on this page updated · About 8 min read
Key points from the video
- The video covers personal taxes and the three most common penalties: filing late, paying late, and underpaying (not sending estimated tax payments or owing a large balance).
- To get a penalty removed you need reasonable cause. In Brian's experience, health problems, illness, depression or a death in the family work; "I forgot" does not.
- Your history matters most. Brian says with a clean filing and payment record a request works about 80% of the time (more with the first-time penalty waiver); with a bad history, less than 10%.
- Make as many attempts as you can: call the number on the notice first, then answer the letter in writing, then file the official penalty abatement form.
- Brian finds the IRS the most lenient. State revenue departments vary, and many Secretary of State offices have a zero-tolerance policy on late fees.
Summarized from Brian's own words in the video.
What's changed since this video
Video published July 26, 2019. Checked against current sources on October 13, 2026. These updates are from the ClearValue Lending Team, not Brian.
- Automatic relief for a clean history New since the video
In the video: There's a first-time penalty waiver if you have always filed and paid on time.
Now: First Time Abate still exists, and you must ask for it. New from summer 2026: under the Automatic Exemption from Penalty, starting with 2025 tax-year returns, the IRS does not assess late-filing or late-payment penalties at all if you filed and paid on time for the three prior years. You get a letter saying so.
Source: IRS — Penalty relief due to First Time Abate or other administrative waiver · as of
- Proof of reasonable cause Changed
In the video: Brian says the IRS simply says yes or no and does not ask for evidence.
Now: The IRS now tells taxpayers to have supporting documentation ready when they call, and to include it with a written request: for example hospital or court records, or a doctor's letter with start and end dates.
Source: IRS — Penalty relief for reasonable cause · as of
- Interest For comparison
In the video: The title promises help with interest; the video covers penalties.
Now: The IRS does not remove interest for reasonable cause or first-time relief. It does reduce the interest tied to a penalty automatically when that penalty is removed. Interest itself can be cut only for an unreasonable IRS error or delay.
Source: IRS — Interest · as of
- Minimum late-filing penalty New since the video
In the video: Not covered.
Now: For a return more than 60 days late, the minimum penalty is $525 (returns due after December 31, 2025) or 100% of the unpaid tax, whichever is less.
Source: IRS — Failure to file penalty · as of
Reader guide · ClearValue Lending Team
IRS penalty relief in 2026: a plain-English guide
Brian's video explains how to get a tax penalty removed: give reasonable cause, lean on a good history and ask more than once. This guide follows the video in order and adds the IRS rules as they stand today, including a new automatic relief program that started in 2026. Every figure comes from irs.gov, checked on October 13, 2026. This covers personal federal taxes, as the video does.
The three penalties most people get
Brian covers this in the video · watch from 0:00
Brian focuses on three penalties: filing late, paying late, and underpaying. Here is how the IRS calculates each one today.
| Penalty | How it is charged | Limit |
|---|---|---|
| Failure to file | 5% of the unpaid tax for each month or part of a month the return is late | 25%. If the return is over 60 days late, a minimum of $525 or 100% of the tax owed, whichever is less |
| Failure to pay | 0.5% of the unpaid tax for each month or part of a month | 25% |
| Underpayment of estimated tax | Charged when you did not pay enough during the year through withholding or estimated payments | Avoided in most cases if you owe under $1,000 or met the safe harbor (see the last section) |
When both late penalties apply in the same month, the IRS reduces the filing penalty by the payment penalty. So the combined charge is 5% a month, not 5.5%.
Example: you owe $10,000 and file and pay three months late. The filing penalty is 4.5% a month for three months ($1,350). The payment penalty is 0.5% a month ($150). That is $1,500 before interest. Filing on time, even if you cannot pay, avoids most of it.
Reasonable cause: what counts
Brian covers this in the video · watch from 0:49
Brian's key phrase is reasonable cause. You need a real reason that stopped you from filing or paying on time. In his experience, health problems, illness, depression or a death in the family are accepted. "I forgot" is not.
The IRS's own test is whether you used ordinary care and prudence and still could not comply. It lists these as examples of valid reasons:
- Fires, natural disasters or civil disturbances.
- Being unable to get your records.
- Death, serious illness or unavoidable absence of you or your immediate family.
- System problems that delayed an electronic filing or payment.
And these generally do not count on their own: relying on a tax preparer, not knowing the rules, mistakes and oversights, and lack of money. Lack of money can still be part of a case if other facts show you tried to comply.
One point has changed since the video. Brian says the IRS just answers yes or no without asking for proof. Today the IRS tells you to have supporting documents ready when you call and to send them with a written request. Examples it gives: hospital or court records, or a doctor's letter with start and end dates.
Why your filing history matters so much
Brian covers this in the video · watch from 2:47
Brian says your record is the biggest factor. From his practice: with a good history of filing and paying on time, a reasonable-cause request works about 80% of the time. With a bad history, less than 10%. These are his estimates, not IRS statistics.
He also mentions the first-time penalty waiver. The IRS calls it First Time Abate. You qualify if:
- You filed the same type of return on time for the prior three years, and
- You had no penalties in those years (other than an estimated tax penalty), or any penalty was later removed for reasonable cause or IRS error.
| First Time Abate | Automatic Exemption from Penalty | |
|---|---|---|
| Tax years | 2025 and earlier | 2025 and later |
| Do you have to ask? | Yes | No |
| What happens | Penalty is charged, then removed | Penalty is never charged |
| Late-payment penalty | Can keep growing until the tax is paid | Not charged on the unpaid tax |
You still have to ask. You do not need to name First Time Abate or send documents; the IRS checks your account. If you ask for reasonable cause and the IRS sees you qualify for First Time Abate, it applies First Time Abate.
New since the video: automatic relief. From summer 2026 the IRS runs the Automatic Exemption from Penalty. It starts with 2025 tax-year returns. If you file or pay late but filed and paid on time for the three prior years, the IRS does not assess the late-filing or late-payment penalty at all. You get a letter explaining why. You still owe the tax and interest.
How to ask: phone, letter, then Form 843
Brian covers this in the video · watch from 4:00
Brian's advice is to give yourself as many chances as possible. It is a numbers game. His order still matches how the IRS handles requests today:
- Call the number on your notice. IRS staff can remove some penalties over the phone. Have the notice, the penalty you want removed, your reason and your documents ready.
- Answer the letter in writing. Brian's second attempt is a short written reply to the address on the notice, explaining your reason.
- File Form 843. The IRS's formal route is Form 843, Claim for Refund and Request for Abatement. Explain what happened and when, how it stopped you from filing or paying, and what you did to try to comply. Attach your documents.
- Appeal if you are denied. If the IRS denies relief, its penalty appeal page explains whether and how you can appeal.
You can authorize someone, such as a CPA or enrolled agent, to talk to the IRS for you. If you cannot resolve the penalty yourself, the Taxpayer Advocate Service, an independent office inside the IRS, may help. A Low Income Taxpayer Clinic may help if you qualify.
What about the interest?
The video's title mentions interest, so here is how it works now. Interest is harder to get rid of than penalties.
- The IRS charges interest on unpaid tax, and on penalties, until the balance is paid in full. An extension to file does not extend the time to pay.
- The rate for individuals is set every quarter. It equals the federal short-term rate plus 3 percentage points. The IRS publishes each quarter's rate on its quarterly interest rates page.
- The IRS does not remove interest for reasonable cause or as first-time relief.
- When a penalty is reduced or removed, the interest charged on that penalty is reduced automatically.
- Interest itself can be reduced only when it built up because of an unreasonable error or delay by an IRS employee. You ask for that on Form 843.
The practical lesson: pay what you can as soon as you can. Every dollar paid stops interest on that dollar.
Other ways out: statutory exceptions
Brian does not cover these, but they can remove a penalty without any excuse at all. Tax law itself provides relief if you:
- Relied on incorrect written advice from the IRS.
- Mailed your return on time (keep proof of mailing).
- Lived in a federal disaster area covered by IRS relief.
- Served in a combat zone or a military operation that qualifies.
The IRS vs. your state
Brian covers this in the video · watch from 6:32
Brian's tips apply to the IRS and to your state's Department of Revenue, though each state sets its own rules. He separates those from the Secretary of State's office, which handles things like annual business filings. In his experience many Secretary of State offices have a zero-tolerance policy on late fees.
His overall view: the IRS is the most lenient of the three, especially with people who have a history of filing and paying on time. And asking costs little. If you have a good record, you have a good chance.
For state penalties, check your state revenue department's website for its penalty waiver or abatement process. We have not checked each state's rules, so treat Brian's comparison as his experience.
How to avoid the penalty next year
The cheapest penalty is the one you never get. A few rules from the IRS:
- File on time, even if you cannot pay. The late-filing penalty is ten times the late-payment penalty per month.
- Pay what you can, then set up a payment plan. If you filed on time, the late-payment penalty drops from 0.5% to 0.25% a month while the plan is in place.
- Use the estimated tax safe harbor. You generally avoid the underpayment penalty if you owe less than $1,000 when you file, or you paid at least 90% of this year's tax or 100% of last year's, whichever is less. If last year's adjusted gross income was over $150,000 ($75,000 if married filing separately), use 110% instead of 100%.
- Check your withholding if you have a job. A new Form W-4 can cover tax on side income.
Next steps
Educational information, not tax or legal advice. ClearValue Lending is an education and comparison platform; it does not prepare tax returns or represent taxpayers. For your own situation, talk to a CPA, enrolled agent or the IRS.
Questions viewers ask
Can the IRS remove a penalty if I have a good reason?
Yes, if you show reasonable cause: you used ordinary care and still could not file or pay on time. The IRS gives examples such as natural disasters, being unable to get records, and death or serious illness in the family. Have documents ready.
What is First Time Abate?
IRS relief for people with a clean record. You qualify if you filed the same return on time for the prior three years and had no penalties then (other than an estimated tax penalty). You have to ask, but you do not need to send documents.
What is the IRS Automatic Exemption from Penalty?
A program that began in summer 2026. Starting with 2025 tax-year returns, if you file or pay late but filed and paid on time for the three prior years, the IRS does not charge the late-filing or late-payment penalty at all. You get a letter; no action is needed.
Does the IRS ask for proof of reasonable cause?
It can. The IRS tells taxpayers to have supporting documents when they call and to include them with a written request, such as hospital records or a doctor's letter with dates.
Will the IRS forgive interest?
Rarely. The IRS does not remove interest for reasonable cause or first-time relief. When a penalty is removed, the interest on that penalty is reduced automatically. Interest can otherwise be reduced only for an unreasonable IRS error or delay.
How much is the IRS late filing penalty?
5% of the unpaid tax for each month or part of a month the return is late, up to 25%. If the return is more than 60 days late, the minimum is $525 (returns due after December 31, 2025) or 100% of the tax owed, whichever is less.
How much is the IRS late payment penalty?
0.5% of the unpaid tax per month, up to 25%. It falls to 0.25% a month during an approved payment plan if you filed on time, and rises to 1% a month 10 days after a notice of intent to levy.
How do I request penalty relief from the IRS?
Call the number on your notice first; the IRS can remove some penalties by phone. If that fails, request relief in writing with Form 843 and your documents. If you are denied, you may be able to appeal.
Is relying on my tax preparer reasonable cause?
Generally not. The IRS says you are responsible for your return even if someone else prepares it. Other facts can still matter, so explain the full situation.
How do I avoid the estimated tax penalty?
You generally avoid it if you owe under $1,000 when you file, or you paid at least 90% of this year's tax or 100% of last year's (110% if last year's AGI was over $150,000) through withholding and estimated payments.
Full transcript
From YouTube's auto-generated English captions, cleaned for punctuation and paragraphs. Brian's words are unchanged except for clear caption errors; text in [brackets] marks an editor's insertion or audio the captions did not catch.
Read the full transcript (1,293 words)
Editor's note: This video is from July 2019. Brian's success rates (about 80% with a good history, under 10% with a bad one) are from his own practice, not IRS figures. The IRS now asks for supporting documents with a reasonable-cause request, and since summer 2026 it automatically skips some penalties for taxpayers with a clean three-year history. See the guide below.
Introduction to IRS penalties watch from 0:00
Welcome back to our channel, ClearValue Tax. My name is Brian Kim, I'm a certified public accountants, and today we will be discussing how to get out of a penalty with the IRS or state. So this video will cover personal taxes. If we're talking business taxes and penalties for businesses, that's a whole separate animal, and we're not gonna get into [in] this video. This is covering just personal taxes. So you most likely receive the penalty for the three most common ones are late filing penalty, late payment penalty, and an underpayment penalty. Underpayment penalty is regarding you not sending in estimated tax payments or just having a large balance due. So those are the three penalties that this video will be covering, on how to get out of the penalty. Okay, so what you need to do is
Understanding reasonable cause watch from 0:49
give reasonable cause. So that is the key word: you need to give reasonable cause. You need to give a good excuse, and your excuse has to have a reasonable cause. Okay, so what are the most common reasonable cause excuses that work well? From my experience, I can tell you that they're gonna be health-related, they're gonna be sickness, they're gonna be depression or death in the family. So usually when you write one of those as reasonable cause, they're going to be acceptable cases of reasonable cause. You can't, you can't just say things like, oh, I just forgot, or, you know, some lame excuse. It's not gonna work.
It's gotta be a reasonable cause, and they have their own definition of what's acceptable, what's not, and I can tell you those excuses usually work. So I say usually because no, they're not gonna work 100 percent of time. It's a case by case scenario, and they're gonna give you a yes or a No. They're gonna say yes, we're gonna accept your reasonable cause, we're gonna eliminate the penalty, or they're just gonna flat out say denied. They're gonna say no. They're not, well, I've never seen this, but they're not going to say, thank you for your reasonable cause, we want evidence, we want proof, we want this.
Oh, you're, you're, you said depression, well, let me see, you know, doctor's visit or doctor's note. Oh, you said death in the family, okay, let's see that, that certificate, or let's see, you know, evidence. No, they're just gonna say accepted, yes, or they're gonna say denied, no, and it's as simple as that. So it's gonna be a yes/no. Okay,
Impact of tax filing history watch from 2:47
I'll say that if you have a good history of filing and paying on time, this reasonable con, these excuses for reasonable cause, it's probably [unclear] work. From my experience, I'll say it's gonna work eighty percent of the time. That's if you have a good history. And a lot of times if you've always timely filed or timely paid, you know, there's a first time penalty waiver, and it'll even work greater than eighty percent of the time. So just know that they're gonna look at your history. If you have a bad history, if you are, I mean, if it's all computerized, it's in their system, if you have a bad history of late filing or late payments, I would say even if you have reasonable cause, I mean, it'll probably work less than ten percent of the time.
That's just from my experience, because I've, I've assisted in these cases of trying to get the penalty waived, and if you have a bad history, wow, I mean, that really works against you. So, you know, just expect to feel a high failure rate if you have a bad history. So just know that. Okay, so if he wants to
Methods for requesting abatement watch from 4:00
have as many attempts as possible to get off this penalty. Okay, let's just say you get the letter that says you filed late, this is your penalty, or you paid late, this is your penalty. If you want as many attempts as possible to just increase the probability of this working for you, I would say first, okay, you get the letter, try by phone, because the IRS agents, they have the power to just make that decision at that discretion, at their discretion, by phone. So you could do this, is gonna be super informal. You know, you get the letter, it says you can contact us here at this specified phone number for your case.
Try giving them a call, try to resolve and give you a reasonable cause of your excuse by phone. So they're gonna say yes or no. Okay, if they say yes, great, you just say, you just saved money, you got off, you got off the penalty. If they say no, well, okay, you know, that attempt got rejected. So what you can do is, you got that letter, the penalty, you can respond to the letter in writing, informally, just citing, you know, your reasonable cause, you know, why you should not be subject to this penalty, and just mail that. It, you know, it's going to be addressed to the left, to the address listed on the letter.
So that's your second attempt. And if they say yes, they accept it, then great, you got off the penalty. If you got rejected, well then, well that mean that, that's, that's terrible. Okay, so if that was your second attempt and it failed, then what you can do is the official penalty abatement form, and that's gonna be your last resort, because you tried informally by phone, you tried informally by responding to a letter, and your third one will be the official penalty abatement form. So those are your, you know, three attempts that you can do. Hopefully you can just take care of it by phone, or if you don't want to talk to the agent, hopefully you can just take care of it with the informal response to the letter, the penalty letter.
So that's just another piece of advice. If you want to maximize the probability of you getting off this penalty, well, it's just a numbers game. The more attempts that you make, the greater chance you have getting it approved. So that's just my
IRS vs state leniency watch from 6:32
advice. Again, this is with the IRS and the states. The state, that's gonna be dependent upon your state, but when I say state, that's the Department of Revenue. So we're not talking about Secretary of State. Secretary of State is much more harsh, or not as lenient. A lot of Secretary of State's, they have a zero-tolerance policy, so they're not gonna accept any excuses. You didn't do this on time or make us pay on time, you're gonna penalize, zero tolerance, zero tolerance policy. So from what I can say is that the IRS, they are the most lenient when comparing to the state, and they're [unclear] very lenient actually when it comes to people with good histories and just a history of timely payments, timely filings.
So just know that. So, you know, if you're considering, should I give this a shot, you know, is it, is it worth my time? Well, I mean, you, you really don't have that much to lose, and just know that if you are good, if you have a good history, you actually stand a high probability of getting off the penalty. So that's just my advice. If you have any questions, please leave them below. I'd be happy to get back to you. If you find this helpful, please give us a like. I'd really appreciate that. We look forward to making more videos. We hope you found this helpful. Thank you so much. Take it [easy].
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