The IRS is moving from First Time Abate to a new relief called Automatic Exemption from Penalty, or AEP. It starts in summer 2026. If you filed and paid on time for the 3 years before, the IRS may not charge some late penalties at all.
For years, the most common penalty relief was First Time Abate. It is for people with 3 years of filing and paying on time. You had to call the IRS or write to ask for it.
The IRS says this relief is changing. The new version is called Automatic Exemption from Penalty. It begins in summer 2026.
Here is how the IRS describes it. Say you file or pay late this year. If you filed and paid on time for the 3 years before, the penalty is not charged in the first place.
It covers 3 penalties: failure to file, failure to pay and failure to make a deposit. It starts with 2025 tax year returns, such as Form 1040.
You do not need to ask for it. When it applies, the IRS sends a letter that says the penalty was not charged because of your on time record.
It does not erase the tax. You still owe any unpaid tax and interest. Other penalties can still apply.
The late filing penalty is large. The IRS says it is 5% of the unpaid tax for each month a return is late, up to 25%. That is why filing on time matters, even if you cannot pay.
If you got a notice with a penalty and think you had a clean record, the IRS says to contact it. A tax pro can check your own record and tell you what applies to you.
Key facts
- New relief: Automatic Exemption from Penalty (AEP), starting summer 2026
- It needs 3 prior years of filing and paying on time
- It covers failure to file, failure to pay and failure to deposit penalties
- It does not remove the tax or interest you owe
- Late filing penalty: 5% a month, up to 25%
Next steps
General information, not tax or legal advice. Updated October 30, 2026. Sources are linked.