Does penalty abatement also remove interest?

No. Penalty abatement removes or reduces the penalty charges on your account, but interest accrued on those penalties is also automatically reduced when penalties are abated. However, the underlying interest on the unpaid tax itself is not removed by penalty abatement — interest accrues from the original due date until the balance is paid in full and generally cannot be waived unless the penalty causing the interest is removed.

Can I request penalty abatement even after I have paid the penalties?

Yes. If you paid penalties that you believe qualify for abatement, you can request a refund of those paid amounts. For First-Time Abatement, file Form 843 within the applicable statute of limitations — generally three years from the due date of the return or two years from the date you paid the penalty, whichever is later. Keep documentation of when you paid and the amount.

What types of penalties can be abated?

The most commonly abated penalties are failure-to-file, failure-to-pay, and failure-to-deposit penalties. Accuracy-related penalties and fraud penalties can sometimes be abated under reasonable cause but are more difficult to remove. Estimated tax underpayment penalties have their own separate relief rules and are generally not eligible for First-Time Abatement.

What is penalty abatement?