The Internal Revenue Service is replacing its long-standing First Time Abate (FTA) program with a new system called Automatic Exemption from Penalty (AEP), making it easier for taxpayers with a strong compliance history to receive penalty relief. Announced on July 8, the new process is designed to automatically remove certain penalties for eligible taxpayers instead of requiring them to contact the IRS and request relief. IRS officials say the change will reduce paperwork, simplify tax administration, and help ensure qualifying taxpayers receive relief they may have previously missed. The agency expects the AEP program to begin rolling out during summer 2026, with a full transition for eligible returns due on or after January 1, 2027.
