Automatic Exemption from IRS Penalty Program

This month, the IRS announced a new automated process to provide penalty relief for taxpayers with a history of filing and paying on time. The Automatic Exemption from Penalty (“AEP”) process will replace the First Time Abate (“FTA”) penalty relief program and eliminate the need to request penalty relief as required by the FTA.

The AEP provides for automated penalty relief to be applied during return processing. Qualifying taxpayers will receive notice from the IRS that relief was granted. Taxpayers will qualify for AEP if they have a history of timely filing returns and paying taxes due for the past three years (or twelve consecutive quarters for quarterly filers). The AEP will automatically apply to penalties related to failure to file, failure to pay, and failure to deposit. 

AEP applies beginning with tax year 2025 original returns and 2026 quarterly returns. Certain returns, including information returns and returns that are specific to transactions or infrequent events generally are not eligible for AEP.

For more information see: IRS simplifies penalty relief, introduces automatic process for eligible taxpayers | Internal Revenue Service