If the taxpayer requests relief for fines imposed for two or more tax periods, the FTA criteria may apply to the earliest tax period, provided that the taxpayer meets the criteria for a clean penalty history for the three tax years prior to the oldest tax period. To comply with the rule of a clean penalty history, the customer cannot have been fined a “significant amount of 13%” in the previous three years on the same tax return for which the customer requests a reduction. Estimated tax penalties cannot be reduced with the FTA exemption. However, the memorandum explains, the delegated authorities do not prevent the TAS from making specific recommendations to the IRS to reduce penalties.
In 2001, the IRS established the FTA to help manage the reduction of sanctions in a consistent and fair manner, reward past compliance, and promote future compliance. Keep in mind that there is an unpublished maximum limit on the amount of fines that the IRS will reduce under the FTA by telephone or by electronic services (called an oral reporting authority). However, the exemption from the estimated penalty for underpayment of taxes under IRC 6654 (e) (A) is not similar to reasonable cause. For that reason, 12 years ago, the IRS created the administrative exemption (FTA) for the first time to reduce fines, 2 which allows individual and commercial taxpayers who normally comply with the rules to request the reduction or elimination of certain penalties that the IRS has imposed on them for the first time.
Basically, you can request a refund of the taxes collected or request the reduction of fines calculated by the IRS that are erroneous at first sight. The first-time reduction (FTA) is an administrative exemption that the IRS can grant to exempt taxpayers from fines for failure to file a return, non-payment and lack of deposit if certain specific criteria are met. Use the penalty worksheet (worksheet for Form 2210, part III, section B Calculate the penalty), below, to calculate your penalty for each period by applying the rate corresponding to each underpayment shown in section A, line 17.