How To Write A Letter To The IRS To Waive a Penalty?

Millions of Americans face IRS penalties for late tax payments or filings every year. As of 2025, the IRS charges a 5% monthly penalty (up to 25%) for late filing and a 0.5% monthly penalty (up to 25%) for late payment, plus daily interest. 

If you have a good reason, the IRS may agree to reduce or remove the penalty. All you need to understand is how to write a letter to the IRS to waive the penalty. 

In this blog, we’ll explore 

• What a penalty waiver request letter is
• Who needs to write one
• Types of penalties that can be waived
• Step-by-step process of writing an effective letter, including sample letters.

So let’s begin!

What is a Penalty Waiver Request Letter?

These penalties could be from:

• Filing tax return late
• Delay in paying taxes
• Not depositing payroll taxes on time
• Mistakes in your tax return

These penalties can be reduced or waived for valid reasons. You might be eligible for IRS penalty relief if you justify the reason well. 

This letter serves as an explanatory letter for waiving the penalty.

Who Needs to Write a Penalty Waiver Request Letter?

Anyone who gets a penalty notice from the IRS and believes the penalty is unfair or should be forgiven can write a penalty waiver letter. 

This includes:

• People who filed taxes late due to illness, disaster, or other problems.
• Small business owners who missed a deadline.
• Taxpayers who made an honest mistake.
• Anyone with a clean history is asking for a first-time penalty abatement.

Without a letter, the IRS assumes that the penalty has been accepted

Common IRS Penalties You Can Get Waived

Before writing your tax penalty waiver letter, understand which penalties can be removed:

• Late filing penalty: 5% per month (up to 25%) on taxes you owe if your return is late.
• Late payment penalty: 0.5% per month on unpaid taxes (up to 25%).
• Accuracy-related penalty: 20% of unpaid tax if the IRS finds big mistakes on your return.
• Estimated tax penalty: If you don’t pay enough during the year (common with freelancers/business owners).
• Trust Fund Recovery Penalty (TFRP): A serious penalty for employers who fail to send payroll taxes.

Also Read → How Does Tax Forgiveness Work? Understanding Your Options for Tax Debt Relief

IRS Penalty Relief Options

Now, let’s understand how the IRS offers relief.

1. First-Time Penalty Abatement (FTA)

The IRS may forbid a penalty through the first-time penalty abatement program if this is your first slip-up in paying taxes.

If this is the first mistake, and

• You’ve filed all required returns.
• You paid (or arranged to pay) any tax due.
• You’ve not been penalized for the past three years.

Then you can request an IRS penalty abatement under the FTA.

This is usually requested by phone, but you can submit it in writing as well

Need Help Writing an FTA Letter? Let Hopkins CPA Firm give you a hand.
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2. Reasonable Cause Relief

If your tax payment was late due to a valid reason, the IRS may forbid penalties. Valid reasons include

• Serious illness or death
• Natural disasters
• Financial hardship
• Incorrect advice from a tax professional

You must provide proof, such as medical reports, FEMA letters, or legal documents.

Know More → What is Hardship Tax Relief? Understanding IRS Financial Assistance

3. Statutory Exception

This type of IRS penalty relief applies when you were misled by incorrect advice from the IRS or other official guidance. You may qualify if:

• You followed written advice from the IRS in good faith.
• You have proof (letters, notices, or emails) showing what the IRS told you.
• You acted based on that guidance and later faced penalties.

To apply:

• Submit your request within 2–3 years, depending on your case.
• Expect a response within 60 days.

What Makes Your Penalty Waiver Request Letter Stand Out?

A strong penalty waiver letter is clear, honest, and well-structured. It should state that:

1. You had a reasonable cause, such as illness, natural disaster, or financial difficulty.
2. You tried to fix the issue by filing your tax return, paying what you could, or contacting the IRS.
3. You usually follow the rules and have a good track record with taxes.
4. You have included dates, documents, and facts to support your reason.

How to Write a Penalty Waiver Request Letter?

Let’s break it down into a clear structure and simple steps.

Step 1: Gather Your Information

Before you start writing:

• Get your IRS notice and tax transcript.
• Identify the penalty type, tax year, and amount.
• Collect evidence to support your request.

Step 2: Use the Right Heading

Start with your name, address, phone number, and the date. Add your Social Security Number (last 4 digits only) or Tax ID.

Then add:

Internal Revenue Service
[Insert IRS Address on Your Notice]

Step 3: Start with a Clear Subject

For example:

Subject: Request for Penalty Abatement—[Insert Tax Year or Form]

Step 4: Explain the Situation

Tell the IRS why you were charged. Then explain what caused the problem. Use simple language. Be specific. State exact dates, amounts, and reasons. Be honest and don’t over-explain.

Step 5: Show You Fixed It

Explain how you resolved the issue. This shows responsibility.

Step 6: Ask Clearly for a Waiver

Mention that you are asking for IRS penalty forgiveness based on reasonable cause. You may also ask for first-time penalty abatement if you qualify.

Step 7: Add Proof

If you have any relevant documents (such as hospital records, letters, or court papers), mention them and attach copies.

Step 8: End Politely

Thank the IRS for their time. Include your signature.

Step 9: Choose the Right Delivery Method

Send your letter early, as timing can significantly influence approval. You can submit your penalty abatement request by:

• Phone: Call the IRS for FTA. (quickest)
• Mail: Send a letter for Reasonable Cause.
• Form 843: For formal cases or IRS errors.

Sample Letter to IRS to Waive Penalty

Here is a sample letter to the IRS to waive the penalty:

Sample Letter for First-Time Abatement

Here’s a sample penalty abatement letter for first-time requests:

Where to Send Your Letter?

Before you send your letter, it’s crucial to ensure it reaches the right IRS office. This depends on the IRS notice you received.

• Check the address listed on your IRS letter or notice.
• The IRS has different mailing addresses based on your state and the type of tax issue.
• Never guess the address; always refer to the most recent IRS notice or visit the IRS Where to File page for confirmation.

If your letter is in response to a specific notice (like Notice CP22A or CP504), the IRS will usually include a return address at the top or bottom of the letter.

What If the IRS Denies Your Request?

If the IRS denies your penalty waiver request, you can:

• Appeal the decision.
• Ask for reconsideration with more supporting documents.
• Hire a tax professional or tax attorney for help.

Denials often occur due to a lack of detail or evidence. Don’t hesitate to revise and try again.

Let Hopkins CPA Firm Help You Write a Perfect Penalty Waiver Letter!

Knowing how to write a letter to the IRS to waive the penalty can make a huge difference. If done right, your IRS penalty dispute could turn into an IRS tax penalty removal. And that’s a huge win for your peace of mind and wallet.

But writing a structured letter can be stressful, especially if you’re unsure what to include or how to say it. That’s where Hopkins CPA Firm comes in. 

We help you draft a strong tax penalty waiver request letter that gets attention; we guide you every step of the way. With our support, you avoid costly mistakes and improve your chances of approval. 

Contact Hopkins CPA Firm to ensure a smooth and stress-free.