Washington, D.C. (March 6, 2026) – The American Institute of CPAs (AICPA) sent a letter to the Internal Revenue Service (IRS) recommending that the First Time Abatement (FTA) program be expanded to cover more types of tax and information return penalties. The letter also asks that taxpayers be allowed to reverse automatically applied FTA relief when taxpayers demonstrate reasonable cause, so they can save their one-time abatement for a future need. Expansion of and targeted refinements to the FTA program would reduce IRS administrative burdens, help taxpayers better understand available penalty relief options, and support voluntary compliance.
Currently, the IRS provides FTA relief based on numerous factors including whether the taxpayer can demonstrate clean compliance history and the type of penalty assessed; however, there are many additional penalties for which taxpayers could demonstrate clean compliance history. Expanded FTA relief allows taxpayers to overcome a speedbump, to continue otherwise compliant behavior, and to be more educated about our complex tax system. Additionally, eligibility for FTA relief has many nuanced exceptions that add complexity to tax administration and confuse taxpayers. Refinements to the existing FTA program would make tax administration clearer and less burdensome on taxpayers, their practitioners, and the IRS.
AICPA’s letter recommends the following actions:
Expand FTA to section 6652 penalties and corresponding annual filings.
Provide FTA relief for information return penalties.
Expand FTA to estate and gift-tax related filings that can recur more than once.
Allow FTA relief for the section 6656 penalty even in cases where Electronic Federal Tax Payment System (EFTPS) is required but not used.
Automatic application of FTA relief and review of reasonable cause statements.
Promote taxpayer awareness of FTA availability.
FTA relief should be available for multiple periods if the failure stems from a single overall error.
“Our recommendations would alleviate significant tax administrative burdens on the IRS, increase taxpayer awareness of the availability of FTA relief, and promote voluntary taxpayer compliance,” said Daniel Hauffe, Senior Manager for Tax Policy & Advocacy with the AICPA. “Ultimately, expanding application of the FTA program and simplifying the procedures reduces unnecessary complexity and reinforces the fairness of penalty administration.”
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com