IRS Makes Change To Tax Penalties—What It Means for Millions of Americans
Summary
The IRS will soon start automatically waiving certain tax penalties for taxpayers who have a history of filing and paying on time. This change, called the Automatic Exemption from Penalty (AEP) program, will begin in summer 2026 and be fully effective for the 2027 tax season.Key Facts
- The IRS will automatically remove penalties for eligible taxpayers instead of requiring them to request relief.
- The program applies to penalties for late filing, late payment, and late deposits.
- To qualify, taxpayers must have filed and paid taxes on time for the last three years or 12 consecutive quarters for quarterly filers.
- The new system replaces the old "First Time Abate" relief that needed a formal request.
- The change aims to help consistent taxpayers avoid penalties without extra paperwork.
- Some taxpayers may still get penalty notices in 2026 as the system updates, but can request relief the old way.
- The IRS will combine this relief effort with tougher enforcement and fraud prevention measures.
- The program does not cover certain tax returns like estate or gift taxes; those taxpayers must use other relief options.
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