The IRS announced an Automatic Exemption from Penalty for certain eligible original returns beginning with tax year 2025 and for 2026 quarterly returns. Eligible taxpayers generally need a timely filing and payment history for the prior three years, or 12 consecutive quarters for quarterly returns.
What the new process does
The IRS says the new systemic process is expected to begin in summer 2026. For qualifying returns, certain failure-to-file, failure-to-pay, and failure-to-deposit penalties are not assessed during processing.
Eligibility is not universal. Information returns and certain returns filed only for infrequent events are generally outside the program, so every notice and filing history still needs to be reviewed on its own facts.
What businesses should do now
Keep filing and payment confirmations, reconcile payroll tax deposits, and review IRS notices promptly. Automatic relief is useful, but it does not replace accurate books, timely filings, or a documented response process.
- Confirm the return was filed on time.
- Retain proof of payments and deposits.
- Review the prior three years or 12 quarters of compliance.
- Have a tax professional evaluate any notice before responding.
Official sources
Use the linked agency material for the complete rule, eligibility criteria, forms, and later updates.
IRS: Automatic Exemption from Penalty (IR-2026-83)↗This article is general educational information and is not individualized tax, accounting, legal, or investment advice. Rules and agency guidance can change after the publication date.