The American Institute of CPAs (AICPA) has called on the Internal Revenue Service (IRS) to broaden and refine its first time abatement (FTA) penalty relief programme.

In a letter to the IRS, the organisation lobbied for FTA be extended to include a wider range of tax and information return penalties than those currently covered.

The AICPA also proposed allowing taxpayers to reverse automatically applied FTA relief when they can show reasonable cause. This would enable them to retain their one-time abatement for a future need.

According to the letter, expanding and fine-tuning the FTA framework would ease administrative pressure on the IRS, make penalty relief options clearer for taxpayers and encourage voluntary compliance.

At present, FTA eligibility depends on factors such as a clean compliance record and the type of penalty involved.

The AICPA noted that there are many other penalties where taxpayers could demonstrate similar compliance histories but are not eligible for FTA.

The institute argued that broader FTA access helps taxpayers move past isolated errors while maintaining otherwise compliant behaviour and improves their understanding of a complex tax system.

In its submission, the AICPA recommended extending FTA to section 6652 penalties and related annual filings, and making FTA available for information return penalties.

It also suggested expanding FTA to certain estate and gift tax filings that can occur more than once and allowing FTA relief for the section 6656 penalty, even when the Electronic Federal Tax Payment System is required but not used.

Other proposals include automatic application of FTA where appropriate, continued review of reasonable cause statements and measures to improve taxpayer awareness of FTA availability.

The AICPA further recommended that FTA be permitted for multiple periods when a series of failures arises from a single underlying mistake.

AICPA Tax Policy & Advocacy senior manager Daniel Hauffe said: “Our recommendations would alleviate significant tax administrative burdens on the IRS, increase taxpayer awareness of the availability of FTA relief and promote voluntary taxpayer compliance.

“Ultimately, expanding application of the FTA programme and simplifying the procedures reduces unnecessary complexity and reinforces the fairness of penalty administration.”

Recently, the AICPA asked the US Department of the Treasury and IRS for guidance on the newly enacted One Big Beautiful Bill Act, or H.R. 1.