Sooln Park
SooIn focuses on individual tax matters while also managing general accounting tasks and supporting the team with tax-related needs. Outside of work, she enjoys Korean baseball and traveling, believing that new experiences enrich both her personal and professional life.
The IRS announced that they will begin implementing a new automatic process to provide penalty relief for eligible taxpayers, Automatic Exemption from Penalty (AEP), in the summer of 2026. AEP replaces the need for eligible taxpayers to request First Time Abate (FTA) relief for covered returns.
FTA (First Time Abate) Administrative Relief
FTA has been the most common administrative relief for individuals and businesses with a history of timely compliance. Taxpayers qualify for FTA relief if they have a history of timely filing the return and paying any tax due in the three prior years.
When taxpayers qualify, penalties are not assessed during processing for (a) failure to file; (b) failure to pay; and (failure to deposit). Additionally, any interest related to those penalties will also be automatically reduced if the penalties are reduced or removed.
Prior to implementation of AEP, taxpayers must contact the IRS to request FTA relief.
AEP (Automatic Exemption from Penalty)
The new AEP eliminates the need for eligible taxpayers to request FTA relief. If taxpayers meet the requirements, the IRS will automatically apply AEP, and the above-mentioned penalties will not be assessed when the original return is processed.
The following returns are eligible for AEP:
- Forms 1040, 1065, 1120
- Forms 940, 941, 943, 944, 945
- Form CT-1
Not all returns qualify for AEP. Information returns and returns that are filed only in response to specific transactions or infrequent events generally are not eligible (e.g., Form 706, Form 709).
AEP applies beginning with 2025 annual tax returns and 2026 quarterly returns, as well as subsequent years.
The IRS will send a notice explaining that, although you filed your return late, paid your tax late, or failed to make a timely deposit, the applicable penalties were not assessed because of your prior history of timely compliance. If you receive a notice assessing a penalty and believe you qualify for this relief, you should contact the IRS to request a review.
Taxpayers who do not qualify for AEP may still request penalty relief based on reasonable causes.
| FTA | AEP | |
|---|---|---|
| Applicable timeframe | All prior years and returns not covered by AEP | 2025 tax year, 2026 quarterly returns, and all future tax years |
| How relief is granted | Taxpayer action required | Automatic |
| Action required by taxpayer | Must contact the IRS | No action required |
| Penalty assessment | Penalty is assessed first and may later be removed | Penalty is not assessed |
| Failure to pay penalty | May continue to accrue until the tax is fully paid | Does not accrue or get assessed |