Wire flash
FinanceIRS: Taxpayers with three-year clean record to get automatic penalty relief
Editorial responsibility
- No named human review is recorded for this page.
- Source reporting is collected, normalized, translated or condensed automatically when needed.
- Automatically published source-backed update
The IRS announced a new Automatic Exemption from Penalty (AEP) policy that will automatically waive late-filing and late-payment penalties for taxpayers with a clean three-year history of timely filings and payments. Previously, eligible taxpayers had to submit a separate appeal to receive penalty relief, which resulted in many missing out—only 220,000 of 1.5 million eligible taxpayers received waivers last year. The new policy, effective for returns beginning in 2025 and 2026 quarterly returns, applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties, which can reach up to 25% of unpaid tax bills. Taxpayers with a history of late filings remain ineligible for automatic relief but can still request it with reasonable cause. IRS CEO Frank J. Bisignano stated the policy aims to simplify tax payment and reduce administrative burden. The National Taxpayer Advocate noted many eligible taxpayers previously missed relief due to lack of awareness or difficulty navigating the request process.
Source report
Chris Morris Tue, July 28, 2026 at 9:00 AM PDT 3 min read
The Internal Revenue Service is making it less burdensome for some taxpayers who file or pay late.
The IRS will automatically waive fines tied to late filing or payment of taxes for taxpayers with a history of timely compliance. The new policy, called the Automatic Exemption from Penalty (AEP), streamlines the process of obtaining penalty relief.
How It Works
Previously, taxpayers with a clean record could avoid fines for late filing or payment, but they had to submit a separate appeal to the IRS. Under the new system, the relief is applied automatically, reducing the burden on both taxpayers and IRS resources.
"Automatic Exemption from Penalty reflects the IRS' commitment to making the payment of taxes owed simpler and more consistent," said IRS Chief Executive Officer Frank J. Bisignano in a statement. "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."
Permanent Relief
The new rules take effect for returns beginning in 2025, as well as any 2026 quarterly returns. The policy is open-ended and will remain in effect for future years.
Penalties will not be assessed during processing for:
- Failure to pay
- Failure to file
- Failure to deposit
Eligibility Requirements
Taxpayers with a history of regular, timely payments qualify for automatic relief if they have:
- Filed returns on time and
- Paid any taxes due in the three prior years (or the last 12 consecutive quarters)
Note: Taxpayers with a pattern of late filing or late payments are ineligible for AEP. However, they may still request penalty relief by demonstrating reasonable cause — though it will not be automatic.
Significant Savings
The financial impact is substantial. Late filing penalties can reach as high as 25% of the unpaid tax bill, and late payment and deposit penalties accrue over time.
According to USA Today, last year only 220,000 taxpayers received penalty waivers, even though more than 1.5 million were eligible.
Erin Collins, the National Taxpayer Advocate, told the paper:
"For years, too many eligible taxpayers missed out on first-time penalty relief simply because they did not know it was available, did not understand how to request it, could not get through to the IRS, or did not have a tax professional advising them."
Even taxpayers who do not qualify for automatic relief may still see some benefits under the new policy.
Image: StiahailoAnastasiia/Envato
Source
Yahoo FinanceWestern
Part of this Story
IRS to Automatically Waive Late-Filing Penalties for Taxpayers with Three-Year Clean Record