First Time Penalty Abatement (FTA) Flashcards
What is First Time Penalty Abatement (FTA)?
FTA is an administrative waiver provided by the IRS, allowing for the removal of certain penalties for taxpayers who meet specific criteria under IRC § 20.1.
Which penalties can be abated under FTA?
FTA applies to certain penalties for failing to file, failing to pay, and failing to deposit, as outlined in IRC § 6651, IRC § 6656.
What are the eligibility requirements for FTA?
The taxpayer must not have penalties for the preceding three years, must be in compliance with all filing requirements, and must have arranged to pay or paid any tax due.
How does Revenue Procedure 84-35 relate to FTA?
Revenue Procedure 84-35 establishes criteria for waiving penalties for failure to file partnership returns, and it might be applied in conjunction with FTA under certain circumstances.
How can a taxpayer request FTA?
A taxpayer can request FTA by calling the IRS or by writing to the IRS Service Center. A formal written statement is not required, as detailed in Internal Revenue Manual (IRM) 20.1.1.3.6.1.
What are the common misconceptions about FTA?
A common misconception is that FTA can only be used once, but it can be applied to more than one tax period within a three-year look-back period.
How does Revenue Ruling 2001-1 apply to FTA?
Revenue Ruling 2001-1 provides guidance on the reasonable cause standard and may be considered in cases where FTA is not applicable, offering insights into how penalties might be abated for reasonable cause.
What is the IRS’s position on the denial of FTA?
The IRS has a policy of considering the facts and circumstances of each case, and the denial of FTA is subject to review. The taxpayer may appeal a denial through normal administrative appeal procedures.
