For years, taxpayers who qualified for First Time Abate (FTA) relief generally needed to contact the IRS and request that certain penalties be removed. While many eligible taxpayers ultimately received relief, the process often required lengthy phone calls, written correspondence, and significant processing time.
The IRS has now begun implementing a new administrative process known as Automatic Exemption from Penalty (AEP). Under this updated system, eligible taxpayers may receive penalty relief automatically, reducing the need to submit separate requests in situations where they clearly meet the qualification requirements.
This change represents a meaningful improvement for taxpayers with strong compliance histories. Individuals and businesses that have consistently filed their returns on time, paid their taxes, or established appropriate payment arrangements may benefit from the streamlined process when certain penalties are assessed.
It’s important to understand, however, that not everybody may be eligible for automatic relief, as it is up to the IRS’ discretion to select applicants that qualify. Eligibility still depends on several factors, including filing history, payment compliance, and the type of penalty involved. Interest charges generally continue to apply, and the underlying tax liability must still be paid.
Even with this new process, taxpayers should continue reviewing every IRS notice carefully. If you receive a penalty notice, don’t assume that automatic relief has already been applied—or that you’re ineligible if it hasn’t. There may still be opportunities to request additional relief depending on your circumstances.