Did You Mess up on Your Taxes? the IRS Just Made it Easier to Avoid Paying a Penalty.

MW Did you mess up on your taxes? The IRS just made it easier to avoid paying a penalty.

Andrew Keshner

It's a 'major taxpayer win,' according to one advocate inside the IRS

The IRS said it's making it easier to walk away from penalties if people slip up after paying their taxes and filing on time.

It's going to be easier for people who messed up on their taxes to get back in the good graces of the IRS.

On Wednesday, the Internal Revenue Service said it was overhauling its penalty process. Beginning this summer, the first time a taxpayer makes a mistake on their taxes, the IRS won't charge them a penalty.

Taxpayers were already generally entitled to penalty relief for first-time missteps like an unfiled tax return or unpaid taxes.

But taxpayers had to come out and ask the IRS for the relief or hire a tax professional who knew that "first-time abatement" was an option.

So Wednesday's news of automatic penalty relief helps taxpayers, even if they didn't know of their existing rights to fight the penalty.

The change is going to help "hundreds of thousands" of taxpayers who were in the dark about the existing abatement process, according to Erin Collins, the IRS's national taxpayer advocate.

She called the news a "major taxpayer win" in a Wednesday blog post. "Relief should not depend on a taxpayer's income, ability to reach the IRS by phone or access to professional representation," she wrote.

In the 2025 fiscal year, the IRS granted first-time penalty abatements to nearly 220,000 taxpayers, Collins said. More than 1.5 million taxpayers could have avoided paying IRS penalties if the automatic waivers were in place at that time, she wrote.

The automatic waiver applies to failure-to-file, failure-to-pay and failure-to-deposit penalties. It will be available to taxpayers who have paid their taxes and filed on time for the three previous years.

Read also: Here's how to find out if you're one of millions of Americans who can claim this IRS refund

The shift to the new penalty process starts this summer and should be fully in place by next year, when 2026 tax returns are due. During the transition period, taxpayers can still request the first-time penalty abatement, according to the IRS. Once the new system is in place, eligible taxpayers will get a notice saying they received the relief.

The change removes some administrative hoops, said Frank Bisignano, CEO at the IRS.

"By automatically applying penalty relief, the IRS recognizes that taxpayers who historically pay on time should not have to make a formal request for relief that is routinely granted," he said.

Advocates outside the IRS applauded the move. "Providing automatic penalty relief will end unneeded financial headaches for hundreds of thousands of taxpayers in the months ahead," said Glen Frost, founding partner of Frost Law, a law firm representing cases before the IRS.

"This removes a hurdle that prevented average taxpayers unfamiliar with complex tax rules for asking for penalty relief," Frost said.

-Andrew Keshner

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July 08, 2026 17:40 ET (21:40 GMT)

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