Relief & Settlements · Bowling Green, KY
Penalties made your balance worse. Some can be erased.
On an older balance, penalties and the interest on them can rival the tax itself. Two separate relief paths exist — and one of them requires no excuse at all.
Direct Answer: IRS penalty abatement First-Time Abate
Internal Revenue Service penalty relief comes in two forms under IRM 20.1: First-Time Abate, which waives failure-to-file and failure-to-pay penalties for taxpayers with three clean prior years and requires no cause narrative, and reasonable-cause abatement for circumstances beyond the taxpayer's control. Bowling Green Tax Resolution has independent tax professionals check both paths — plus Kentucky Department of Revenue penalty waivers — before any balance is negotiated.
Path one: First-Time Abate (no excuse needed)
If you were compliant for the three years before the penalty year — returns filed, no prior penalties of the same type, and current on an installment agreement if you have one — the IRS will abate failure-to-file, failure-to-pay, and failure-to-deposit penalties essentially as a matter of policy (IRM 20.1.1.3.2.1). No illness narrative, no disaster documentation. It's the most under-claimed relief in the system, because nobody advertises it on the radio.
Path two: reasonable cause
When life genuinely interfered — serious illness, a natural disaster, records destroyed, bad advice from a prior preparer you reasonably relied on — the IRS can abate penalties on the facts. The key is contemporaneous documentation: what happened, when, and how it prevented compliance. Vague hardship claims fail; specific, evidenced timelines succeed.
The compounding nobody mentions
Penalties accrue interest too. On a balance several years old, the penalty-plus-interest stack can exceed the original tax — which means abatement can cut some balances nearly in half without touching the underlying liability. Any honest resolution plan for a Bowling Green taxpayer starts here: strip what's removable before negotiating what's left. And don't forget the Kentucky side — KY DOR penalties need their own waiver request. Bowling Green tax professionals evaluate both on the first call.
Common questions
What is First-Time Penalty Abatement?
FTA is administrative relief (IRM 20.1.1.3.2.1) from failure-to-file, failure-to-pay, and failure-to-deposit penalties for taxpayers with a clean compliance history for the prior three years. It is requested by phone or in writing — no "cause" narrative required.
What counts as reasonable cause?
Facts beyond your control that prevented compliance: serious illness, natural disaster, inability to obtain records, reliance on professional advice, and similar circumstances documented with evidence.
Can penalties be abated on Kentucky DOR balances too?
Kentucky has its own penalty-waiver provisions, separate from the IRS. Both should be evaluated — state penalties are often overlooked.
Does abatement reduce the underlying tax?
No — abatement removes penalties (and the interest that accrued on them), not the tax itself. But on older balances, penalties and interest can exceed the original tax, so the savings are real.
Kentucky penalty math
What the state adds while a balance sits
Federal failure-to-file and failure-to-pay penalties come from 26 U.S.C. § 6651, and the IRS’s First Time Abate policy can remove them for one tax period if your recent history is clean [1] [2].
Kentucky runs its own schedule under KRS 131.180. Late filing costs 2% of the tax for each 30 days, up to 20%; late payment is another 2% per 30 days, up to 20%. If you never file and the Department estimates the tax, the failure-to-file penalty is 5% per 30 days, up to 50%, with a $100 minimum [3].
The bigger shock is often the collection fee. If a Notice of Tax Due is not protested or paid within 60 days, the Department refers it to collections and adds a 25% cost-of-collection fee to each notice [4] [5]. Interest also keeps running. The Department’s published interest table lists 7% for 2026 and 8% for 2025 [6].
What that means in practice
Take a $3,000 Kentucky balance. Left alone past 60 days, the 25% fee adds $750 before any interest. Moving inside that first window by paying, protesting or setting up a plan is usually worth more than any later abatement request. The Kentucky Taxpayer Ombudsman cannot waive tax, penalty or interest for you, but can help if the Department has not dealt with your problem through normal channels [7].
On the federal side, First Time Abate generally needs no penalties in the prior three years and all required returns filed or on extension. It removes failure-to-file, failure-to-pay and failure-to-deposit penalties, but the interest on them only goes away with the penalty itself [2]. Ask for both governments’ penalty relief together, because a Kentucky waiver request and an IRS First Time Abate request are separate.
Sources for this guide
- 26 U.S.C. § 6651 — Failure to file or payaccessed 2026-10-14
- IRS — Penalty relief: First Time Abate and other administrative waiversaccessed 2026-10-14
- Kentucky Department of Revenue — Penalties, Interest and Fees (KRS 131.180)accessed 2026-10-14
- Kentucky Department of Revenue — I Received a Tax Billaccessed 2026-10-14
- Kentucky Department of Revenue — Payment Plans for Qualified Applicantsaccessed 2026-10-14
- Kentucky Department of Revenue — Interest & Tax Rate Table 1989–2026 (PDF)accessed 2026-10-14
- Kentucky Department of Revenue — Taxpayer Ombudsmanaccessed 2026-10-14
Every source used on this site: the full source list.
You may be paying penalties you don't actually owe.
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