How to Request Penalty Abatement in Virginia: Step-by-Step Guide

Requesting tax penalty abatement requires a specific process for both the IRS and the Virginia Department of Taxation. This guide covers every step: determining eligibility, gathering documentation, choosing between phone and written requests, drafting your letter, submitting it, following up, and handling a denial.

The process differs depending on whether you are requesting first-time penalty abatement (simpler, often resolved by phone) or reasonable cause relief (requires documentation and a written request). Virginia state penalty relief always requires a written request, since the state does not have an automatic FTA program.

Step 1: Determine Your Eligibility

Before submitting a request, evaluate which type of relief you qualify for.

Check for First-Time Penalty Abatement (IRS Only)

First-time penalty abatement is the easiest path for IRS penalties. You qualify if all three conditions are met:

No penalties assessed for the three tax years prior to the penalty year
All required returns filed (or valid extensions in place)
Tax paid in full or an approved payment arrangement in place

Check your compliance history through your IRS Online Account at irs.gov or call 800-829-1040 and ask the agent to review your history.

If you meet all three criteria, skip to Step 3 and request FTA by phone.

Evaluate Reasonable Cause (IRS and Virginia)

If FTA does not apply, or if you need Virginia state penalty relief, evaluate your reasonable cause argument. Qualifying circumstances include:

Serious illness, hospitalization, or incapacitation
Natural disaster, fire, or casualty loss
Death of an immediate family member
Inability to obtain records despite reasonable effort
Reliance on incorrect advice from a licensed tax professional
IRS or state agency error or delay

You must show "ordinary business care and prudence," meaning you tried to comply but circumstances prevented it.

Identify Which Penalties to Target

Review your penalty notices carefully. Identify each penalty type (failure to file, failure to pay, accuracy, estimated tax) and the amount for each. Your request should specify which penalties you are asking to have removed.

Note: interest generally cannot be abated, so focus on the penalties.

Step 2: Gather Your Documentation

For First-Time Penalty Abatement

FTA requires minimal documentation. The IRS agent checks your compliance history in their system. You need your Social Security number, the tax year, the notice number, and confirmation that returns are filed and tax is paid or arranged.

For Reasonable Cause

Match documentation to your circumstances:

Medical emergency: Doctor's letter with dates and nature of incapacity, hospital records, documentation showing how the condition prevented handling tax matters, and evidence of when you resumed normal activities.

Natural disaster or fire: FEMA declaration (if applicable), insurance claims, police or fire reports, photos of damage, and records of displacement.

Inability to obtain records: Copies of requests you sent, responses received, dates when records became available, and interim steps you took.

Professional reliance: Engagement letter, written advice received, evidence you provided complete information, and the professional's credentials.

Death in the family: Death certificate, your relationship to the deceased, estate administration documentation, and a timeline.

General Documents for All Requests

Copies of the penalty notice, copies of filed returns for the penalty year, proof of payment or installment agreement, and a clear timeline of events.

Step 3: Choose Your Request Method

Option A: Phone Call (Best for FTA)

Call the IRS at 800-829-1040. Tell the agent you are requesting first-time penalty abatement for the specific tax year. The agent verifies your history and can approve the abatement during the call.

Tips:

Call early morning or late afternoon for shorter waits
Have your SSN, tax year, and notice number ready
Reference: "first-time penalty abatement under IRM 20.1.1.3.6.1"
If denied, ask for a supervisor review
Record the agent's name, ID, date, and outcome

Option B: Written Letter (Best for Reasonable Cause)

A letter allows you to present your full narrative with documentation. Required for Virginia state penalty relief.

Letter structure:

Header: name, address, SSN, phone number
Subject: "Request for Penalty Abatement, Tax Year [YYYY], Notice [number]"
Opening: specific penalty type and amount you want removed
Circumstances: what happened, when, and how it prevented compliance
Ordinary business care: steps you took to try to comply
Current compliance: all returns filed, tax paid or arranged
Documentation list: reference each attached document
Closing: request written response

Keep it to one to two pages. Be factual and specific.

Option C: IRS Form 843

Form 843, "Claim for Refund and Request for Abatement," works for IRS penalties. Complete with your information, tax year, penalty type and amount, and reason code. Attach a separate explanation and documentation.

Step 4: Write Your Request Letter

Opening: Be Direct

"I am writing to request abatement of the failure to file penalty of $2,340 assessed for tax year 2024, as shown on Notice CP14 dated September 15, 2025."

Body: Chronological Facts with Dates

Present events in order with specific dates. Show the cause-and-effect chain: triggering event, how it prevented compliance, when you resolved the issue.

Ordinary Business Care: Show You Tried

Explicitly address the standard. Describe your history of timely compliance, the steps you took during the crisis, and what you did as soon as the obstacle was removed.

Closing: Confirm Current Compliance

State that all returns are filed, tax is paid, and you have taken steps to prevent future issues.

Step 5: Submit Your Request

For IRS Requests

Mail to the IRS service center on your penalty notice. For most Virginia taxpayers:

Internal Revenue Service P.O. Box 802503 Cincinnati, OH 45280-2503

(Verify the current address on irs.gov.)

Use certified mail with return receipt. Keep copies of everything.

For Virginia State Requests

Mail to the address on your Department of Taxation penalty notice, or to:

Virginia Department of Taxation P.O. Box 1115 Richmond, VA 23218-1115

(Verify the current address on tax.virginia.gov.)

Use certified mail with return receipt for Virginia requests as well.

Electronic Options

Virginia Tax Online Services may allow electronic correspondence for some notice types. Check your account at tax.virginia.gov. The IRS does not currently accept penalty abatement requests through its online portal for most individual taxpayers.

Step 6: Follow Up

IRS Timeline

FTA by phone: immediate resolution
Written FTA request: 30 to 45 days
Reasonable cause letter: 30 to 60 days
Complex cases: 60 to 120 days

Call 800-829-1040 if no response within the expected timeframe.

Virginia Timeline

Standard penalty relief request: 60 to 90 days
Complex cases: 90 to 120 days

Contact the Virginia Department of Taxation if no response within 90 days.

While Waiting

Penalties and interest continue accruing during review unless the agency suspends them. Continue making any required payments. If approved, the agency adjusts your account and refunds penalties already paid.

Step 7: What to Do If Your Request Is Denied

IRS Appeals

Submit an appeal to the IRS Office of Appeals within 30 days of the denial. Include a copy of the denial, a statement explaining why you disagree, additional documentation, and Form 12203 for amounts under $25,000.

The Office of Appeals is independent from collections. Appeals officers frequently overturn initial denials.

Virginia Appeals

If the Department of Taxation denies your request:

Tax Commissioner review: Request a review by the Virginia Tax Commissioner
Circuit court petition: If the Commissioner's decision is unfavorable, petition the Virginia circuit court for judicial review

Strengthening Your Appeal

If denied for insufficient documentation, gather the additional evidence. If denied because circumstances did not meet the reasonable cause standard, reframe the facts more explicitly on appeal, emphasizing dates and the direct connection between circumstances and inability to comply.

Consider hiring an enrolled agent for the appeal if you handled the initial request yourself.

When to Hire a Professional

Professional help is important when:

Penalties exceed $5,000
Multiple tax years are involved
Both IRS and Virginia penalties are assessed
Your reasonable cause argument is complex
A previous request was denied
The IRS or Virginia has started collection actions

Bill Fritton, EA, MBA, at Virginia tax penalty abatement expert in Vienna, VA handles the full penalty abatement process for Virginia taxpayers: eligibility analysis, documentation, submission, follow-up, and appeals for both IRS and Virginia state penalties. Contact Back Tax Expert Inc. for a consultation.

Checklist: Before You Submit

Eligibility:

Checked three-year compliance history for FTA eligibility
Identified reasonable cause circumstances if FTA does not apply
Verified all required returns are filed
Tax paid or payment arrangement in place

Documentation:

Copy of penalty notice
Supporting documents for circumstances
Copies of filed returns for penalty year
Proof of payment or installment agreement

Request prepared:

Letter or Form 843 completed
Specific penalty type and amount identified
Timeline with specific dates included
Ordinary business care addressed
Current compliance confirmed

Ready to submit:

Correct mailing address confirmed
Copies made of everything
Certified mail with return receipt purchased
Separate requests prepared for IRS and Virginia if both apply

Frequently Asked Questions

What form do I use to request penalty abatement?

For IRS penalties, use Form 843 or a written letter. For first-time penalty abatement, a phone call to 800-829-1040 often works. For Virginia state penalties, submit a written letter to the Department of Taxation.

Where do I send the request in Virginia?

Send IRS requests to the service center on your penalty notice (Cincinnati processing center for most Virginia taxpayers). Send Virginia state requests to the Department of Taxation, P.O. Box 1115, Richmond, VA 23218-1115. Always use certified mail.

How long does penalty abatement take?

IRS FTA by phone resolves during the call. Written IRS requests take 30 to 60 days. Virginia requests take 60 to 90 days. Appeals add additional time.

Can I request abatement for multiple years?

Yes. Submit separate requests for each tax year. FTA applies to the earliest eligible year. For other years, use reasonable cause. Each year is evaluated independently.

Can I request abatement for both IRS and Virginia at the same time?

Yes, but submit separate requests to each agency. They operate independently. The same facts and documentation can support both requests.

What happens to interest if penalties are abated?

Removing penalties reduces your balance, which reduces future interest. Interest already accrued on penalties is generally not reversed unless caused by an agency error.