Penalty Abatement in California
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Reviewed by the Commoner Law Editorial Team. Sourced from primary statutes (U.S. Code, CFR, state compiled statutes) and official government agency guidance. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
How California differs from federal law
California FTB has its own penalty abatement rules:
- Reasonable cause: California accepts reasonable cause requests for penalty abatement, similar to the IRS. Natural disasters, serious illness, and reliance on professional advice are common grounds.
- One-time penalty abatement: California does not have an equivalent to the IRS's "First Time Abate" program. Each request is evaluated on reasonable cause.
- Disaster relief: California frequently provides automatic penalty relief for taxpayers in federally declared disaster areas (wildfires, earthquakes, floods).
- Voluntary Disclosure Program: California offers a program for taxpayers who voluntarily come forward to report previously undisclosed tax obligations, with reduced penalties.
Additional Steps in California
Submit a written penalty abatement request to FTB at the address on your notice. Include supporting documentation. Appeal denied requests to the California Office of Tax Appeals (OTA).
Relevant Law: California Revenue and Taxation Code § 19131 (penalties), § 19132 (reasonable cause relief)
Federal baseline: Penalty Abatement nationwide
What is this right?
The IRS hands out penalties for late filing, late payment, and accuracy issues — but you can ask to have them removed, and the agency does it routinely. If something real happened — serious illness, death in the family, natural disaster, IRS-caused delay, bad advice from a tax pro you reasonably relied on — the penalty often comes off entirely. That's called reasonable cause abatement, and it's been built into the regulations under § 6651 for decades.
Even if you don't have a story, the IRS offers First Time Penalty Abatement (FTA) — an administrative waiver for anyone with a clean compliance history. Three prior years of on-time filing and on-time payment, and you can call the IRS at 1-800-829-1040 and simply ask. The penalty comes off, no documentation needed. Most taxpayers eligible for FTA never know it exists and pay penalties they could have erased with one phone call.
When does it apply?
You can request abatement when:
- The IRS assessed a penalty — failure to file, failure to pay, estimated tax, accuracy.
- You have a reasonable cause: illness, death in family, natural disaster, fire, IRS error, bad professional advice you reasonably relied on.
- You have a clean compliance history — three prior years of on-time filing and payment qualifies for First Time Abatement.
Three myths:
- "IRS penalties are final." No. You can request abatement on any penalty, and the IRS grants them by the millions every year.
- "You need a lawyer." Most penalty abatements happen on a phone call or in a one-page letter. No representation needed for the simple cases.
- "FTA only works once." The waiver itself is one-time per period, but the three-year lookback resets. Stay compliant for another three years and you qualify again.
What to Do If the IRS Charged You a Penalty
Step 1: Identify the penalty. The notice tells you exactly what was assessed and how much. Penalty type matters — different types have different abatement paths.
Step 2: Try First Time Abatement first. Call 1-800-829-1040, ask for FTA. If you've filed and paid on time for the prior three years, the agent can usually remove the penalty in the same call. Free, fast, no documentation.
Step 3: If FTA doesn't apply, write a reasonable cause request. Form 843, or a plain letter. Explain what happened, what you did to try to comply, and attach proof — doctor's notes, hospital records, FEMA disaster declarations, death certificates, dated correspondence with your tax pro.
Step 4: Appeal a denial. Form 12203 (Request for Appeals Review) gets you to the Independent Office of Appeals, where settlements happen on cases the examiner wouldn't budge on.
Step 5: Don't expect interest abatement. Interest is statutory — it generally can't be abated unless an IRS error or delay caused it. But removing the underlying penalty also stops interest from accruing on the penalty.
What should you NOT do?
Don't accept the penalty without asking. Most penalties get paid because nobody bothered to call. Five minutes on the phone for FTA is the highest hourly return in personal finance.
Don't make vague excuses. "Busy" and "forgot" don't qualify as reasonable cause. Specifics with documentation work — major surgery dated to the filing window, FEMA declaration for the relevant zip code.
Don't pay and assume it's over. You can request abatement after the fact and they'll refund. Generally, the deadline is within three years of the return filing date or two years from the date you paid.
Don't miss the abatement deadline. Three years from filing or two years from payment, whichever is later. Past that and the door closes.
You shouldn't have to hire a lawyer to assert your rights.
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Penalty Abatement in other states
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