California Finally Mirrors the IRS By Allowing First-Time Penalty Abatement


By Caroline Wu & Elizabeth Lowery

For decades California has refused to enact a statute mirroring that of the IRS which expressly provides taxpayer with first-time abatement of penalties for failure to file tax returns or failure to timely pay the tax due. This left Californians with a lack of predictability regarding whether taxpayers who were seeking penalty abatement for the first time would be successful. But, this changed when Assembly Bill 194 was signed into law by Governor Gavin Newsom in late 2022, and thus enacted California Revenue and Tax Code (“RTC”) Section 19132.5 which grants qualified taxpayers a once in a lifetime abatement of timeliness penalties for failure-to-file or failure-to-pay. The forms via which such First Time Abatement could be requested just recently became available on the website of California’s tax authority, the Franchise Tax Board (the “FTB”) at

Here is what you should know:

What: Penalties eligible include the Failure to File (RTC § 19131) and the Failure to Pay (RTC § 19132)

Applicable for taxable years beginning on or after January 1, 2022

When: The FTB will begin to accept one-time penalty abatement requests on April 17, 2023

How: The one-time abatement can be requested verbally or in writing. You may file FTB form 2918 or call 800.689.4776 to request the one-time abatement

Who: Available only to eligible individuals subject to personal income taxes (not applicable to fiduciaries, estates, or trusts)

Must not have previously been granted a one-time abatement under Section 19132.5

Must be compliant with all tax return filing requirements

Must have paid in full all outstanding liabilities (other than the penalties being sought for abatement), or arranged to pay pursuant to a payment plan and be current on all installment payments

Even if taxpayers don’t meet either the FTB’s or the IRS’s criteria for first time abatement, they can still seek penalty abatement. The granting of such requests is determined by a showing of “reasonable cause.” Reasonable cause is determined on a case by case basis considering all the facts and circumstances of a particular situation. The attorneys at Freeman Mathis & Gary, LLP routinely assist taxpayers and their tax preparers in crafting such abatement requests, both on the federal and state level. For more information and guidance on these issues, please contact Caroline Wu at, Elizabeth Lowery at, or your local FMG attorney.