Do You Qualify for a New IRS Taxpayer Assistance Program?
A new penalty relief program could help millions of Americans in the months ahead. Are you eligible for this relief? Here is everything that you need to know.
New IRS Program Will Provide Automatic Relief to Millions of Americans
Millions of American taxpayers could be eligible to take advantage of a new automated penalty relief process launched by the Internal Revenue Service (IRS). The Automatic Exemption from Penalty (AEP) program offers penalty relief for failure to file, pay, or deposit employment taxes. The new program applies to original returns starting with the 2025 tax year and 2026 quarterly returns. Future tax periods will also be considered for the automatic relief.
Tax experts are heralding the program as a win for American taxpayers. Erin Collins with the National Taxpayer Advocate said that the program will "help hundreds of thousands of taxpayers, reduce unnecessary burden, and conserve IRS resources."
Who is eligible for the automatic tax penalty relief? Americans with a history of filing their tax returns on time and paying their fees over the last three years, or for 12 consecutive quarters, are eligible for the program. These filers do not need to take additional action to receive the relief. The IRS confirmed that the AEP will apply automatically and that taxpayers will be provided with a notice that the relief was granted.
IRS Chief Executive Officer Frank Bisignano said, “By automatically applying penalty relief, the IRS recognizes that taxpayers who historically pay on time should not have to make a formal request for relief that is routinely granted."
The program is designed to end the financial obstacles that many taxpayers face when trying to understand the nation's complicated tax law. By removing these hurdles, the IRS is making it easier for the average taxpayer to navigate the system without having to jump through additional hoops.
Who is Eligible for the AEP Program?
Qualified American taxpayers can now receive penalty relief for failure to file, failure to deposit, and failure to pay. It is hard to quantify the amount of money that Americans might save under this program. However, late filing penalties are historically significant, reaching up to 25% of the total unpaid tax.
Not all tax returns will be eligible for AEP. For instance, returns filed under specific transactions or one-time events are not typically eligible for the program. This includes the Form 709 Gift Tax Return, Form 706, and the U.S. Estate Tax Return.
It is estimated that millions of taxpayers will qualify for the penalty relief. However, only about 220,000 filers received the penalty relief through the manual First Time Abate process in 2025. Had the AEP been in place during that fiscal year, over 1.5 million taxpayers would have qualified and automatically enjoyed the relief.
The program is expected to be particularly beneficial to low-income taxpayers who may not be able to afford representation. It also takes some of the guesswork out of the penalty relief process for those who do not have a tax professional helping them to file their returns.
Tax experts note that you do not have to take advantage of the program to enjoy the benefits in indirect ways. Because the program is engineered to reduce face time with IRS agents, the agency will receive fewer phone calls and written requests. This type of modernization will free up resources so that IRS employees will be able to assist taxpayers with issues that necessitate direct communication. In other words, the new relief program is shaping up to be a win-win for all Americans.
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