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Penalty Abatement in California: IRS and FTB Guide (2026)
Short answer: Penalty abatement asks an agency to remove a penalty, not the tax, and California taxpayers deal with two: the IRS (first-time abatement or reasonable cause) and the Franchise Tax Board (a one-time abatement for tax years beginning in 2022 or later, or reasonable cause). You can ask yourself. All State Tax Resolution, an Enrolled Agent firm in Los Angeles (Enrolled Agents are IRS-licensed representatives), prepares both.
How penalty abatement works in California
A penalty abatement is a request that an agency remove a penalty. It does not remove the tax. Californians deal with two separate systems, and relief from one does not carry over to the other: the IRS for federal tax and the Franchise Tax Board (FTB) for California income tax.
Penalties are charged as percentages, most of them building month by month to a cap. At the IRS, failure to file is 5% a month up to 25%, and failure to pay is 0.5% a month up to 25%, dropping to 0.25% a month while an installment agreement is in effect and rising to 1% a month after a notice of intent to levy. At the FTB, late filing is 5% a month up to 25% (R&TC 19131), late payment is 5% plus 0.5% a month capped at 25% in total (R&TC 19132), and ignoring a Demand for Tax Return adds a 25% demand penalty (R&TC 19133).
The IRS and the FTB side by side
First-time relief — IRS: First-Time Abate: failure-to-file, failure-to-pay and failure-to-deposit penalties for one period, if the prior three years are clean, all required returns are filed and the tax is paid or in a payment plan. It cannot be reused within three years.; California FTB: One-Time Penalty Abatement: late-filing and late-payment penalties, once in a lifetime for an individual, for tax years beginning on or after January 1, 2022, if all required returns are filed and the tax is paid or on a current payment plan. No first-time relief for older years.
Reasonable cause — IRS: Ordinary business care and prudence: serious illness, death in the immediate family, disaster, inability to get records, or wrong written advice from the IRS.; California FTB: A written claim; form FTB 2917 for individuals.
How to request — IRS: By phone, by letter, or on Form 843.; California FTB: One-time abatement: form FTB 2918, or by phone. Reasonable cause: in writing.
Not covered — IRS: The tax itself, and interest (except interest on an abated penalty).; California FTB: The tax itself, and the 25% demand penalty under the one-time abatement.
For 2025 returns onward, the IRS has announced that it applies first-time relief automatically for eligible taxpayers; it calls this Automatic Exemption from Penalty. Older years still need a request.
What counts as reasonable cause, and what does not
Reasonable cause means you can show ordinary business care and prudence: you acted as a careful person would, and something outside your control still kept you from filing or paying on time. The IRS standard lists serious illness, death in the immediate family, disaster, inability to get records, and wrong written advice from the IRS. For the FTB you make a written claim, on form FTB 2917 if you are an individual, explaining what happened.
What does not carry a claim: a penalty that simply feels too large, a general statement with no dates or records behind it, or an event that did not actually prevent you from filing or paying. Reasonable cause is judged on the facts, so a request needs a timeline and evidence, such as records of the event and, for wrong advice, the written advice itself.
Interest is separate from penalties. The IRS does not abate interest except the interest charged on a penalty it abates, and interest keeps running while a payment plan is in effect. FTB interest accrues at the FTB's own rate, adjusted semiannually.
How a request is made, step by step
Match each penalty to an agency, a year and a type. Use the IRS notice (a CP14 itemizes tax, penalties and interest) or account transcript, or your MyFTB account.
Get compliant. Both first-time routes need every required return filed and the tax paid or on a payment plan.
Pick the route. IRS: phone, letter, or Form 843. FTB: form FTB 2918 or a call for the one-time abatement, and a written request (FTB 2917 for individuals) for reasonable cause.
Document the cause. For reasonable cause, send dates, records and any written advice, and keep copies.
Wait, and keep paying. Neither agency promises a date, and in general a phone request moves faster than a letter or Form 843. Interest keeps running on unpaid tax meanwhile.
Book a free 15-minute tax review if you are not sure which of your penalties qualify for first-time relief and which need a reasonable cause request.
Who can make the request
You can, by phone or letter. An Enrolled Agent, CPA or attorney can do it for you under a Form 2848 for the IRS and the FTB's own power of attorney form, FTB 3520, for the FTB. Low Income Taxpayer Clinics help eligible taxpayers for free or at low cost, and the Taxpayer Advocate Service steps in when normal IRS channels have failed.
Your options in California
Free and low-cost routes come first:
Ask the agency directly. The IRS takes requests by phone, by letter or on Form 843; the FTB takes them by phone or on its forms. Your IRS Online Account and MyFTB account show balances.
IRS Taxpayer Assistance Centers. In Los Angeles County: downtown Los Angeles, El Monte, Van Nuys and Long Beach, by appointment only through 844-545-5640. They answer account questions and take payments; they do not negotiate on your behalf.
Taxpayer Advocate Service. Free, at (213) 576-3140 in Los Angeles, for hardship or when normal IRS channels have failed.
Low Income Taxpayer Clinics. Free or low-cost representation for taxpayers under an income limit, listed in IRS Publication 4134.
FTB field office. 300 South Spring Street, Suite 5704, Los Angeles (appointments at 213-897-5196; no cash).
Paid routes are tax attorneys (needed when there is criminal exposure or litigation), CPAs, other Enrolled Agents and national tax relief companies. Whoever you choose, get the fee and the plan in writing before you pay.
How to check whoever you hire
Credential. Enrolled Agents, CPAs and attorneys can represent you before the IRS. You can verify any Enrolled Agent's status with the IRS, through its public directory of credentialed preparers or its Office of Enrollment.
A flat fee in writing. It should be quoted after someone has looked at your IRS and FTB account transcripts, with no separate investigation fee.
Who handles your case. Ask who will personally work it, and whether that person holds the credential.
No promised outcome. The agency decides, so anyone who promises to remove all of your penalties is promising something they do not control.
How we work with California clients
All State Tax Resolution is based in Los Angeles and prepares IRS and FTB penalty requests remotely, by phone, video and a secure client portal. I am Sabih Shafi, the founder and an Enrolled Agent. An Enrolled Agent is licensed by the IRS under Treasury Circular 230 and can represent taxpayers before IRS Collections, Examination and Appeals in all 50 states. We pair penalty relief with the rest of the case when it is needed: payment plans, back tax returns and offers.
The first review is free. After we review your IRS and FTB account transcripts, you get a flat fee in writing, tied to the work (years, forms, agencies) and not to the size of your debt, with no separate investigation fee. Payment plans are available for the fee. Mailing address: 1110 N Virgil Ave, Los Angeles, CA 90029. Phone: (323) 900-0305.
Frequently Asked Questions
How does penalty abatement work in California?
Penalty abatement is a request to remove a penalty, not the tax itself. The IRS offers first-time abatement and reasonable cause relief, and the FTB offers a one-time abatement for tax years beginning in 2022 or later plus reasonable cause relief. Each agency has to be asked separately, and relief from one does not carry over to the other.
Who offers penalty abatement services in California?
You can ask either agency yourself by phone or letter, and Low Income Taxpayer Clinics help eligible taxpayers for free or at low cost. Enrolled Agents, CPAs, tax attorneys and national tax relief companies prepare requests for a fee, so get the fee and the plan in writing first. I am an Enrolled Agent based in Los Angeles, and we prepare IRS and FTB penalty requests remotely.
Is first-time penalty abatement automatic?
For 2025 returns onward, the IRS has announced that it applies first-time relief automatically for eligible taxpayers, which it calls Automatic Exemption from Penalty. Older years still need a request. The FTB's one-time abatement is requested on form FTB 2918 or by phone.
Can I get interest removed along with the penalty?
The IRS does not abate interest except the interest charged on a penalty it abates. FTB interest accrues at the FTB's own rate, adjusted semiannually. Paying the tax sooner limits how much interest builds up while a request is pending.
Do I have to file and pay before I ask for abatement?
For IRS First-Time Abate and the FTB's one-time abatement, all required returns must be filed and the tax paid or on a payment plan. If you cannot pay in full, set up a payment plan first. File any missing returns before you ask, because a request made while returns are missing does not meet either agency's first-time conditions.
Last reviewed: October 2026 by Sabih Shafi, EA
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This article is general information, not individual tax advice. If you want to talk through your own IRS or state balance, book a free 15-minute review or call or text us directly.
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