Automatic Exemption from Penalty Coming for Good-Standing Taxpayers
The IRS is using the summer of 2026 to roll out the new Automatic Exemption from Penalty (AEP) program. AEP eliminates the need to manually request first-time penalty relief. The IRS AEP designed to simplify the process and reduce burden for those with a timely compliance history
If you file or pay late but have a clean, three-year history of timely compliance, the IRS system automatically waives failure-to-file, failure-to-pay, and failure-to-deposit penalties.
The AEP requires no action on your part. Instead of assessing the penalty and waiting for you to ask for a waiver, the IRS simply will not assess it in the first place. The following shows the key details of how this works.
Eligibility
You must have filed all required returns and paid (or arranged to pay) any tax due for the three prior tax years. Or for quarterly filers, the previous 12 consecutive quarters.
Applicable Returns
The process applies to original returns for the 2025 tax year, 2026 quarterly returns, and all future tax periods.
Confirmation
You will receive a notice from the IRS explaining that even though you filed or paid late, the penalties were not assessed due to your timely compliance history.
Note that the removal of a penalty does not mean you’re exempt from filing or paying your taxes.
AEP replaces the older, long-standing First Time Abate (FTA) administrative relief. After receiving notice of a penalty, the IRS required taxpayers to call or submit a written request to get their penalties removed.
During the transition to the new Automatic Exemption from Penalty program, some qualifying taxpayers may still receive penalty notices for eligible tax year 2025 and 2026 quarterly returns. Taxpayers who believe they qualify may contact the IRS to request First Time Abate.
Taxpayers who do not qualify for AEP may still request penalty relief based on reasonable cause. The IRS will review those requests and notify taxpayers of the outcome.
If you’d like to check your previous tax records on the official portal, you can log in to your account at IRS web page Your Account.
Links
This IRS web page explains more about penalty relief for reasonable cause.
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