The IRS Just Made Penalty Relief Automatic. Sort Of.
If you’ve got a clean track record with the IRS, I’ve got some good news for you. The IRS just announced a new program called Automatic Exemption from Penalty (AEP), and it’s replacing the old First Time Abate process that’s been around forever.
Here’s the deal. Starting with tax year 2025 and 2026 quarterly returns, if you’ve got a history of filing and paying on time, the IRS will automatically waive certain penalties without you having to do a thing. We’re talking failure to file penalties, failure to pay penalties, and failure to deposit penalties. All handled behind the scenes.
No phone calls. No forms. No spending hours on hold just to ask for relief you clearly deserve.
Sounds Great. What’s the Catch?
It’s the IRS. You knew there’d be a catch.
Their systems are notorious for not keeping up with policy changes. So even if you qualify for AEP, don’t be shocked when a penalty notice shows up in your mailbox anyway. The IRS announces these programs with fanfare, but the computers that generate notices? They didn’t get the memo.
This isn’t me being cynical. It’s just how it works. The IRS is a massive bureaucracy, and the left hand doesn’t always know what the right hand is doing. Automated notices go out based on old logic and computers, and it takes time for updates to filter through the system.
What Should You Do?
If you get a penalty notice and you know you’ve been compliant, don’t panic. And don’t just pay it to make it go away. There’s a good chance the penalty should have been automatically waived under AEP, and you just got caught in the gap between policy and implementation.
That’s where we come in. Contact FACTS CPA if you receive a penalty notice you think is wrong. We’ll pull your records, verify your eligibility, and make sure you’re not paying a penalty you don’t owe. The IRS may have automated the relief, but sometimes you still need a human to clean up after the machines. Yes, we are still far away from machines taking over especially at the government level.