First Time Penalty Abatement Attorney in New Jersey and New York

First time penalty abatement is one of the most straightforward and underutilized IRS relief programs available to individual and business taxpayers. If you have a history of tax compliance and received a penalty for the first time in a three-year period, the IRS has a formal administrative policy that allows those penalties to be removed without requiring you to prove why the failure happened. Most taxpayers who qualify never request it because they do not know it exists. Thai Nguyen Law helps clients in New Jersey, New York, and nationwide identify and pursue first time penalty abatement quickly and correctly.

What First Time Penalty Abatement Is and Who Qualifies

First time penalty abatement, known as FTA, is an IRS administrative waiver codified in IRS Policy Statement 20-1 and IRM 20.1.1.3.6. It allows the IRS to remove certain penalties from a taxpayer’s account without requiring any showing of reasonable cause. The three qualifying criteria are straightforward: the taxpayer has filed all required returns or has a valid extension for any unfiled return, the taxpayer has paid or arranged to pay any tax currently owed, and the taxpayer has no penalties assessed in the prior three tax years other than an estimated tax penalty. If all three conditions are met, the FTA waiver is available as a matter of IRS policy.

FTA applies to the failure-to-file penalty, the failure-to-pay penalty, and the failure-to-deposit penalty for employment taxes. It applies to individuals, S corporations, C corporations, partnerships, and estates and trusts. It applies to one tax year at a time, meaning it removes the penalties for the first year of non-compliance in a clean three-year window. Taxpayers with multiple years of penalties may qualify for FTA on the first year only, with reasonable cause arguments needed for subsequent years. Because FTA requires no explanation or documentation of why the failure occurred, it is the fastest and simplest path to penalty relief for qualifying taxpayers.

The IRS does not automatically apply FTA. The taxpayer or their representative must request it. A request can be made by phone to the IRS, in writing, or during an in-person interaction. Requests made by phone are often resolved the same day for straightforward cases, but a written request creates a documented record and is preferable when the account has any complexity. If the IRS denies an FTA request, a formal written appeal to the IRS Independent Office of Appeals is available. Attorney Nguyen handles FTA requests at every level of the IRS process.

How Much Can FTA Actually Save?

The savings from a successful FTA request depend on the size of the tax liability and the length of time penalties have been accumulating. The failure-to-file penalty reaches its maximum of 25 percent of the unpaid tax after five months. The failure-to-pay penalty reaches its maximum of 25 percent after 50 months. On a $20,000 tax liability where both penalties have reached their maximum, the combined penalty balance is $10,000, not counting interest on those penalties. Removing both penalties through FTA eliminates that $10,000 and reduces the interest accruing on the balance going forward. For larger liabilities or liabilities that have been accruing for several years, the savings are proportionally greater. FTA is not a strategy that requires complex legal argument. It requires knowing the rules and asking.

How Thai Nguyen Law Handles First Time Penalty Abatement Requests

Before making any FTA request, we pull the client’s IRS account transcript to verify that all three qualifying criteria are satisfied. An FTA request made when the taxpayer has a prior penalty on their account will be denied, and a denial can sometimes complicate a subsequent reasonable cause request. We verify the three-year compliance window, confirm that all required returns are filed or extended, and confirm the current payment or arrangement status before submitting any request.

Our approach to first time penalty abatement includes:

  • Pulling and reviewing the client’s IRS account transcript to verify all three FTA qualifying criteria before making any request
  • Identifying all penalties on the account and determining which are subject to FTA and which require a separate reasonable cause argument
  • Preparing and submitting the FTA request, whether by phone for straightforward cases or in writing for complex accounts
  • Pursuing denied FTA requests through the IRS Independent Office of Appeals when the qualifying criteria are clearly met
  • Coordinating FTA with overall tax resolution, including installment agreements and Offers in Compromise, to maximize total relief
  • Advising on reasonable cause arguments for penalty years that fall outside the FTA window when multiple years are at issue

FTA and Reasonable Cause: Using Both Strategically

When a taxpayer has penalties for multiple years, FTA and reasonable cause are not alternatives. They are sequential tools. The IRS applies FTA to the most recent penalty year first, which may not be the largest year. A strategic approach identifies which year carries the largest penalty balance, applies FTA there if it qualifies as the first year in a three-year clean window, then pursues reasonable cause for remaining years. Used correctly together, total penalty reduction can be substantial. Attorney Nguyen maps the full penalty landscape before deciding the right strategy for each year.

What to Expect Working With Us

  • 01 – Free Consultation — We review your IRS account and compliance history at no cost and tell you immediately whether you qualify for FTA.
  • 02 – Transcript Review and Verification — We pull your IRS account transcript and verify that all three qualifying criteria are met before submitting any request.
  • 03 – Request Submission — We submit the FTA request to the IRS, handle all follow-up, and confirm that the penalty abatement is properly reflected on your account.
  • 04 – Full Resolution Strategy — FTA is often one component of a broader resolution. We address the remaining balance and any additional penalty years as part of a complete tax resolution plan.

Why Choose Thai Nguyen Law?

As a refugee from Vietnam now attorney in the United States, Attorney Nguyen built a practice that serves people who face large institutions without a roadmap. The IRS is one of the largest and most formidable institutions any individual or small business will encounter. Having skilled legal representation makes the most measurable difference, because the IRS does not walk taxpayers through the process and denies inadequate requests as a matter of course.

Thai Nguyen’s journey from immigrant to attorney in the United States — from refugee to immigrant to practicing lawyer — built a practice that handles both personal injury and tax matters for clients who need real solutions, not just explanations. Thai Nguyen Law serves New Jersey and New York and handles IRS matters nationwide, with services in English, Vietnamese, and Spanish.

  • Free consultation — Understand your options before taking any action
  • Attorney representation — Direct IRS communication handled by a licensed attorney
  • Multilingual service — English, Vietnamese, and Spanish
  • Nationwide tax representation — IRS matters handled for clients across the country

Frequently Asked Questions

The three qualifying criteria are: you have filed all required tax returns or have a valid extension in place, you have paid or arranged to pay any current tax owed, and you have no penalties on your IRS account for the prior three tax years other than an estimated tax penalty. The most common disqualifier is a prior penalty in the three-year lookback window, including penalties that were themselves abated. An IRS account transcript reveals your penalty history and compliance record, which is the definitive way to confirm eligibility. Attorney Nguyen pulls and reviews the transcript as the first step in every FTA evaluation.

Yes. FTA applies to individual income tax, business income tax, and payroll tax failure-to-deposit penalties. Partnerships, S corporations, C corporations, and sole proprietorships can all qualify for FTA on business tax penalties when the three criteria are met. Business entities have their own compliance history that is separate from the individual owners’ personal tax history. A business owner whose company has a clean penalty history for the prior three years can seek FTA for a business penalty even if the owner personally had issues in those years, and vice versa. Attorney Nguyen evaluates both the individual and business entity compliance records separately when both are at issue.

Yes. Paying a penalty does not forfeit your right to request abatement. If the penalty has already been paid and you qualify for FTA, you can file a claim for refund. For penalties paid within the last two years, a refund claim can be submitted directly to the IRS. Penalties paid more than two years ago may still be recoverable depending on the specific circumstances and applicable limitations periods. The key is to act. Waiting further after a paid penalty only makes recovery harder, not easier. Attorney Nguyen evaluates refund eligibility for previously paid penalties as part of every FTA consultation.

Using FTA resets your three-year compliance clock for FTA purposes. After FTA is applied for one year, you must maintain a three-year penalty-free record before FTA is available again. This is why FTA should be deployed strategically, particularly when a taxpayer has multiple years of penalties. Applying FTA to a year with a small penalty when a subsequent year has a much larger penalty may not be the best approach. Attorney Nguyen maps the entire penalty landscape across all affected years and advises on the optimal sequence of FTA and reasonable cause requests before any request is submitted.

Think You Qualify for FTA? Call Thai Nguyen Law Today.

First time penalty abatement is one of the fastest and most effective IRS relief options available, and most qualifying taxpayers never ask for it. If you have IRS penalties on your account and a history of otherwise good compliance, contact Thai Nguyen Law for a free consultation. Attorney Nguyen handles IRS penalty relief for clients in New Jersey, New York, and nationwide.

Call or text: 201-566-1604 | Free Consultation | IRS Representation Nationwide