CHESAPEAKE, Va. — The IRS is rolling out a new program that could save eligible taxpayers money if they make a mistake on their taxes.
The program, called Automatic Exemption from Penalty, or AEP, began this month. It replaces the old system where taxpayers had to formally request forgiveness for penalties.
Taxpayers qualify if they have filed and paid their taxes on time for the past three years. The IRS will automatically waive penalties for failing to file or pay, beginning with eligible returns for the 2025 tax year. Qualifying taxpayers will receive a notice confirming their penalty was waived.
Dr. Lilly Mbinglo, a CPA with ARK NPS Accounting, said the new program is a significant improvement over the previous first-time abatement system, which could only be used once.
"So let's say you have three good years from now, and then down the road, you have a bad year, what happens, right? They're still going to look back at your record and put that into consideration and waive the penalty. So for anyone who, you know, and I've had situations like that… clients using their first time abatement and just feeling like, oh, I feel like I lost my lottery ticket, right? Cause you use it one time and you're done... thankfully, this will not be the case," Mbinglo said.
The old relief program will be completely phased out for returns due on or after Jan. 1, 2027.
Taxpayers who receive a notice suggesting otherwise and believe they qualify can contact the IRS to request a review.
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