A taxpayer with a clean record who files late or pays late has long been able to ask the IRS to wipe out the penalty once. That request, known as First Time Abate, is being retired. The agency is replacing it with a process that does not wait for a request.
The question for anyone who might file or pay late in the next few years is whether a first penalty can still be waived after the change. The IRS says yes for some returns and no for others, and the dividing line is the return’s due date.
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The January 1, 2027 cutover is measured by due date
The IRS announced the change in news release IR-2026-83, dated July 8, 2026. It says the new Automatic Eligibility Process “will replace First Time Abate for eligible returns with original due dates on or after Jan. 1, 2027.”
The test is the original due date of the return, not the tax year and not the day the return is actually filed. A 2026 income tax return is due in 2027, so its penalties fall under the new approach, while a return due on December 31, 2026 or earlier stays under the old one.
The IRS says it will begin phasing out First Time Abate and moving to the automatic process during the summer of 2026. Until the automatic process fully takes over, some eligible taxpayers may still receive penalty notices for 2025 and 2026 quarterly returns, and those who believe they qualify can ask for First Time Abate.
What replaces it works without a request
The new process is systemic, meaning the IRS applies it while processing a return. Taxpayers “do not need to take action to receive this relief,” the release says, and the IRS will send a notice confirming that it was granted.
It applies to eligible original returns beginning with tax year 2025, and to 2026 quarterly returns and later periods. Eligibility turns on a clean record: a history of “timely filing the return and paying any tax due in the three prior years.” For quarterly returns, the lookback is 12 consecutive quarters.
Where a taxpayer qualifies, the IRS does not assess penalties for failure to file, failure to pay or failure to deposit during processing. The release gives no dollar thresholds, so the three-year record is the only numeric test for most returns.
What the automatic process leaves out
The IRS states that “not all returns are eligible.” Information returns, and returns filed only for specific transactions or infrequent events such as Form 706 or Form 709, generally do not qualify. The automatic relief also does not waive tax or interest, and taxpayers “must still pay any tax and interest due, as well as any penalties not eligible for relief.”
That makes the change narrower than a plain swap. First Time Abate was a request that could be made after a penalty notice arrived, while the automatic process is a screening done at processing. A return that falls outside the eligible list has to rely on the other route the IRS keeps open.
That route is reasonable cause. Taxpayers who do not qualify for the automatic process “may still request penalty relief based on reasonable cause,” and the IRS says it will review those requests and notify taxpayers of the outcome.
Why the line matters for retirees
Retirees are more likely than workers to have irregular filing situations: an inherited account, a first required withdrawal, a year with income from several sources. A first-ever late payment on a return due in 2026 can still be handled through First Time Abate. The same slip on a return due in 2027 is judged by the automatic screen.
The IRS’s page on filing past-due tax returns, updated May 7, 2026, shows that a missed filing carries other costs too. It says the IRS holds income tax refunds when its records show one or more past-due returns, and that a refund claim must be filed within 3 years of the return due date.
The penalty for a missed required distribution works differently. Its waiver runs through Form 5329 and a letter of explanation, according to the IRS’s RMD FAQs, so the end of First Time Abate does not change how that excise tax is handled.
A short checklist before the cutover
For returns due before January 1, 2027, First Time Abate remains available to those with a clean record who face a penalty. That includes the 2025 return and any 2026 quarterly estimated or employment filings, subject to the phase-out the IRS describes.
For returns due on or after that date, the practical step is to keep three years of on-time filing and full payment, since that history is what the automatic process checks. A taxpayer who lands outside it, or whose return type is excluded, would need to argue reasonable cause.
The release does not say what the notice will look like, only that one will be issued. Anyone who receives a penalty bill after January 1, 2027 for a covered return should compare it with the filing history for the three prior years before paying.
Will a first penalty still be waived on a return due in 2027?
A retiree who files late or pays late on a return due after 2026 no longer has First Time Abate to fall back on, and the automatic replacement only helps those with three clean years behind them. Anything outside that history, or outside the eligible return types, turns into a penalty bill or a reasonable-cause request.
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This article was produced with AI assistance and edited for accuracy against the sources linked above.
