Navigating Pennsylvania State Penalty Abatement: Your Essential Guide

Introduction

Tax penalties can quietly accumulate and cause significant financial strain for Pennsylvania residents and small businesses. Whether it's a missed filing deadline, a late payment, or an honest error on your income tax return, these penalties can rapidly escalate, often accompanied by interest and lien fees that exacerbate the overall amount owed.

Fortunately, the Pennsylvania Department of Revenue offers a pathway to relief through what’s commonly referred to as penalty abatement—the formal process of requesting the removal or reduction of tax penalties. While Pennsylvania doesn't use the term “abatement” as the IRS does, the state does provide options for tax forgiveness and relief for eligible taxpayers who can demonstrate reasonable cause for noncompliance.

This guide explains how to navigate Pennsylvania tax law concerning penalty relief. You'll learn about the types of tax penalties that may qualify for abatement, how to meet eligibility requirements, and how to file a formal appeal with the Board of Appeals using Form REV-65. We’ll also highlight common mistakes to avoid, required documentation, and what to expect once you file your request.

What Is Pennsylvania Penalty Abatement?

In Pennsylvania, penalty abatement formally requires removing or reducing state-imposed tax penalties. Unlike the IRS, which offers administrative relief, Pennsylvania requires taxpayers to file a formal appeal using Form REV-65. The Board of Appeals reviews the request, which considers each case individually.

Relief is not granted automatically. You must submit a complete written request with documentation showing that the penalty resulted from a situation beyond your control, such as a serious illness, natural disaster, or technical failure. The process is structured but provides fair consideration for eligible taxpayers under Pennsylvania tax law.

Key Differences Between Pennsylvania and Federal Penalty Relief

• No automatic abatement

The IRS may offer first-time penalty abatement or administrative relief in some cases. In contrast, Pennsylvania does not automatically reduce penalties under any circumstances.

• Formal petition required

Pennsylvania requires taxpayers to submit a written request using Form REV-65. The request must include a clear explanation of the issue, relevant facts, and supporting documentation.

• Board of Appeals oversight

The Board of Appeals handles all requests for penalty relief, evaluating each case individually.

• No dedicated "penalty abatement" program

While the process serves the same purpose, Pennsylvania does not use the exact terminology found in federal programs. Relief is granted under general appeal procedures rather than a standalone penalty forgiveness initiative.

When to Consider Filing for Penalty Abatement

Taxpayers should consider requesting penalty relief when they meet the following conditions:

• A taxpayer fails to file or pay taxes due to circumstances beyond their control.
  
• A valid explanation exists, such as a serious illness, a natural disaster, or a system failure.
  
• The taxpayer acted in good faith and has tried to comply with tax law requirements.
  
• The assessed penalty is financially burdensome, and documentation exists to support a reasonable cause claim.
  

By understanding the structure of tax relief options in Pennsylvania and how they differ from federal programs, taxpayers can take the appropriate steps to address their tax penalties effectively.

How the Penalty Relief Process Works in Pennsylvania

In Pennsylvania, the process for obtaining penalty abatement is formal. It must be initiated by petitioning the Board of Appeals, an administrative body within the Pennsylvania Department of Revenue. This board has the authority to review taxpayer appeals and may approve the removal or reduction of tax penalties when the circumstances justify relief under state tax law.

Steps in the Penalty Abatement Process

1. The taxpayer receives a penalty notice.

The Pennsylvania Department of Revenue issues a written notice that details the tax liability, including unpaid tax, interest, and any associated penalties. The mailing date on the notice begins the 90-day window for appeal.

2. The taxpayer submits Form REV-65.

To formally request penalty relief, the taxpayer must complete Form REV-65, which includes information about the tax year, tax type, amounts owed, and the reason for requesting a reduction. The form must be submitted within the required timeframe.

3. The Board of Appeals evaluates the petition.

Once the petition is filed, the board reviews all supporting documentation and the explanation provided. The board considers whether the taxpayer acted in good faith, whether reasonable cause existed, and whether the taxpayer made efforts to comply with Pennsylvania tax obligations.

4. A hearing may be scheduled if necessary.

The board may offer a virtual hearing through Microsoft Teams. During the hearing, the taxpayer or representative can provide testimony or clarification to support the request for penalty abatement.

5. The board issues a written decision.

After reviewing the case, the board sends a written determination. If the request is granted, the Department of Revenue will update the taxpayer’s account to reflect the reduced or removed penalty. The taxpayer has the right to appeal to the Board of Finance and Revenue if the request is denied.

Factors the Board of Appeals Considers

The Board of Appeals evaluates several factors when determining whether to grant penalty relief:

• The taxpayer must have filed all required income tax returns and be in overall compliance with Pennsylvania law.
  
• Any outstanding taxable income must have been paid in full or arranged through a payment agreement.
  
• The taxpayer must provide documentation showing that the failure to comply was due to circumstances beyond their control.
  
• The request must be supported by evidence demonstrating good-faith efforts to meet tax obligations.
  
• The taxpayer’s history of compliance with prior tax years is also considered.
  

This process ensures that only taxpayers who acted responsibly and experienced legitimate difficulties receive relief from tax penalties. By following the correct procedures and submitting a well-supported petition, eligible taxpayers may reduce their overall tax burden and avoid further collection actions.

Common Tax Penalties Eligible for Relief

The Pennsylvania Department of Revenue imposes various tax penalties when taxpayers fail to comply with state tax law. These penalties often result from unpaid taxes, late filings, or other tax issues related to individual or business compliance. Fortunately, many of these penalties may be eligible for relief through the penalty abatement process.

Understanding which penalties you are facing is the first step toward determining whether you qualify for relief. The most commonly challenged penalties relate to delays in filing income tax, payment failures, and technical non-compliance.

Tax Penalties That May Qualify for Relief

The table below outlines the most frequent tax penalties imposed by the Pennsylvania Department of Revenue and whether they may be addressed through a formal appeal:

• Late Filing Penalty:
  • Rate: 5% of unpaid tax per month
  • Maximum: 25% of unpaid tax
  • Description: Applies when a taxpayer fails to file a required return by the due date.
• Late Payment or Underpayment Penalty:
  • Rate: 5%
  • Maximum: No maximum
  • Description: Imposed when the full tax liability is not paid by the due date.
• Employer Withholding Late Payment:
  • Rate: 5% of withheld tax per month
  • Maximum: 50%
  • Description: Charged to employers who fail to remit withheld taxes on behalf of their employees.
• Sales Tax Late Filing:
  • Rate: 5% per month
  • Maximum: 25%
  • Description: Applies when a business fails to file its sales tax return on time.
• Electronic Payment Failure:
  • Rate: 3% of the payment amount
  • Maximum: $500
  • Description: Applies when required electronic tax payments are not made properly.
• Uncollectible Funds Penalty:
  • Rate: 10% of the payment amount
  • Maximum: $100 (minimum $25)
  • Description: Enforced when a taxpayer’s payment is returned due to insufficient funds.
• Fraud Penalty:
  • Rate: 50% of the tax owed
  • Maximum: No maximum
  • Description: Imposed for intentional misrepresentation or fraudulent activity.

Most Commonly Abated Penalties

The late filing and late payment penalties are the most frequently reduced or removed by the Board of Appeals. These penalties often result from temporary hardships such as medical emergencies, system failures, or natural disasters. If you provide clear documentation and a valid explanation that shows you acted in good faith, the Pennsylvania Department of Revenue may grant partial or complete penalty abatement.

Who Qualifies for Penalty Relief?

You may qualify for penalty abatement if you filed all required tax returns, addressed any unpaid tax, and submitted your request within 90 days of the notice date. You must also show that your noncompliance was due to events beyond your control, such as illness, a natural disaster, or technical failures.

The Board of Appeals does not accept reasons like financial hardship, forgetfulness, or relying on a tax preparer. Strong documentation and a clear explanation of your tax issue are essential to receiving relief.

General Eligibility Criteria

To be considered for penalty relief in Pennsylvania, you must meet the following conditions:

• You must have filed all required tax returns, including past-due returns for the applicable tax year.
  
• Any unpaid tax must be paid in full or addressed through a partial payment agreement with the department.
  
• You must submit a written request for penalty relief within the required timeframe, usually within 90 days of the notice's mailing date.
  
• You must provide documentation that supports your claim of reasonable cause, such as medical records, court documents, or correspondence with a tax professional.
  
• Your request must clearly explain why you could not comply and the steps you took to resolve the issue.
  

Failure to meet any of these criteria may result in automatic denial, regardless of the severity of the penalty.

What Pennsylvania Considers “Reasonable Cause”

The Board of Appeals may grant relief when it determines that you experienced an unexpected and unavoidable hardship that interfered with your ability to meet your tax obligations. Common examples include

• Medical emergencies or serious illnesses affecting the taxpayer or an immediate family member.
  
• Natural disasters, fires, or floods that destroyed essential tax documents
  
• Death of a spouse or family member shortly before a due date
  
• Technical issues, such as Pennsylvania’s e-filing system errors, banking delays, or widespread power outages
  
• Burglary or theft that resulted in the loss of essential financial records
  

The taxpayer must show that the situation directly impacted their ability to file or pay on time and that they acted promptly to resolve the issue once it was resolved.

What Does Not Qualify for Penalty Relief

The Pennsylvania Department typically does not consider the following as valid reasons for removing penalties:

• Financial hardship on its own, without accompanying evidence of reasonable cause
  
• Ignorance of tax rules, including a misunderstanding of filing instructions or deadlines
  
• Reliance on a tax professional who made an error unless there was a clear breakdown beyond your control
  
• Forgetfulness, simple oversight, or neglect to file a joint return or a separate return
  
• General business problems, such as staffing shortages or cash flow interruptions, without documentation
  

To improve your chances of success, your request must focus on the events that made compliance impossible, not simply inconvenient.

Step-by-Step Guide to Filing a Penalty Relief Petition

Taxpayers seeking penalty abatement in Pennsylvania must follow a specific process outlined by the Pennsylvania Department of Revenue. This process is formal and must be handled carefully to ensure the Board of Appeals adequately reviews your appeal. The following steps explain how to prepare, submit, and follow up on your written request for penalty relief.

Step 1: Gather All Relevant Documentation

Before submitting your penalty abatement request, you must collect documents that explain your situation and support your claim of reasonable cause. At a minimum, include a copy of the penalty notice, the relevant income tax return, and a written explanation of the circumstances that caused the delay or error. Your documentation should clarify that you acted in good faith and tried to comply with Pennsylvania tax law.

If applicable, also include supporting materials such as medical records, death certificates, legal documents, bank statements showing payment attempts, or emails related to system issues. Well-organized, relevant documentation helps the Board of Appeals understand your challenges and evaluate your request more favorably. Submitting clear evidence is one of the most critical steps toward a successful outcome.

Step 2: Confirm Your Appeal Deadline

You must file your petition within 90 days of the mailing date listed on your penalty notice. If you miss this deadline, the Board of Appeals will dismiss your request, regardless of how compelling your circumstances may be.

To avoid missing the appeal window:

• You should review the penalty notice to locate the exact mailing date.
  
• You should mark your calendar immediately to track the 90-day deadline.
  
• You should file electronically if you are approaching the end of the filing window, as this method provides instant confirmation and avoids postal delays.
  

Step 3: Complete Form REV-65

Form REV-65 is the official petition document used to request penalty abatement. It is available through the department’s website. Make sure each section is filled out clearly and accurately.

Here is a summary of each section:

• Section I – Tax Information
  Identify the tax type, tax year, and amounts received as penalties. Indicate that you request a “reassessment/review,” not a refund.
  
• Section II – Petitioner Information
  Enter your legal or business name, Social Security or Federal Employer ID Number, mailing address, and contact details.
  
• Section III – Representative Information
  If a tax attorney or accountant represents you, complete this section and attach Form REV-677, the power of attorney form.
  
• Section IV – Hearing Request
  Decide whether you want a virtual hearing or a decision based solely on the written record. A hearing may help if your case involves complex facts or credibility concerns.
  
• Section V – Correspondence Preferences
  Choose whether you want responses by mail or email. Email is faster but may raise confidentiality concerns.
  
• Section VI – Issues and Arguments
  Provide a detailed explanation of why the penalties should be reduced or removed. Reference relevant facts, attach supporting documents, and explain how your situation meets the criteria for reasonable cause.
  
• Section VII – Certification
  Sign and date the form. If you are represented, your authorized representative must also sign.
  

Step 4: Submit the Petition

You can submit the completed petition in one of the following ways:

• Online Filing (Recommended)
  Use the Board of Appeals Online Petition Center:
  https://www.eservices.revenue.pa.gov/FileAnAppeal/
  Submitting online provides instant confirmation and 24/7 access.
  
• Mail Filing
  Send completed forms to:
  PA DEPARTMENT OF REVENUE
  BOARD OF APPEALS
  PO BOX 281021
  HARRISBURG PA 17128-1021
  
• Express Mail
  Use this address for time-sensitive submissions:
  PA DEPARTMENT OF REVENUE
  BOARD OF APPEALS
  4TH AND WALNUT STREETS
  STRAWBERRY SQUARE, 10TH FLOOR
  HARRISBURG PA 17120
  

The board does not accept petitions by email or fax.

Step 5: Monitor Your Case

After submitting your petition, you must track your case and respond to any follow-up from the Board of Appeals.

To stay on top of your petition:

• You should retain your confirmation number if you filed electronically or keep the postal receipt for mail submissions.
  
• You should check for any additional document requests the board sends and respond promptly.
  
• You should be prepared to provide more supporting materials if your original submission is incomplete.
  
• You should respond to any hearing invitations in a timely and professional manner.
  
• You should expect to receive a written decision from the Board that explains whether your request for penalty abatement was granted or denied.

Forms and Documentation You’ll Need

Filing for penalty abatement with the Pennsylvania Department of Revenue requires more than an explanation. You must submit the appropriate forms and supporting documentation to ensure your written request is processed correctly. Without the proper paperwork, your petition is unlikely to be reviewed or granted, even if your situation would otherwise qualify for relief under Pennsylvania tax law.

This section outlines the key forms and documents every taxpayer should prepare before submitting an appeal to the Board of Appeals.

Primary Form Required: Form REV-65

The main document used to request relief is Form REV-65, the official Board of Appeals Petition Form. Taxpayers requesting relief from tax penalties, interest, or tax liability must complete and submit this form. The REV-65 form must be filled out accurately and completely for each tax year or issue you are challenging.

The form includes the following components:

• Taxpayer identification details, including name, address, and contact information
  
• Tax type and tax year associated with the penalty
  
• Identification of the specific penalty or amounts received in dispute
  
• Statement of issues and arguments, which must describe your reasonable cause
  
• Certification section with the taxpayer’s or representative’s signature
  

When filling out Form REV-65, select the correct appeal type. For penalty abatement, you must choose “Reassessment/Review,” not “Refund.”

Supporting Documentation Checklist

To support your request for penalty abatement, you must submit documents that clearly explain and validate your circumstances. At a minimum, include:

• A copy of the penalty notice or assessment letter
  
• The relevant income tax return for the period in question
  
• A written explanation of the tax issue and the reason for your written request
  

Include any of the following if they apply:

• Medical records, court documents, or death certificates
  
• Proof of partial payment or payment attempts
  
• System failure reports or bank correspondence
  
• Police reports or insurance claims for lost records
  
• Prior communications with the Pennsylvania Department of Revenue
  

Well-documented petitions have a higher chance of being reviewed favorably by the Board of Appeals.

Additional Forms You May Need

Depending on your situation, additional forms may be required:

• Form REV-677—Power of Attorney
  This form must be submitted if you allow a tax attorney, accountant, or other authorized party to act on your behalf or sign the petition.
  
• Form DBA-10 – Request for Compromise
  If you request to settle your case for less than the full tax liability, you must submit this form within 30 days of filing Form REV-65.
  

Submitting all necessary forms and documents upfront helps avoid delays and increases your chances of a successful outcome. A complete petition shows the Board of Appeals that you are prepared, compliant, and serious about resolving your tax issues.

Common Mistakes That Can Hurt Your Case

When filing a request for penalty abatement with the Pennsylvania Department of Revenue, avoiding critical errors is just as important as meeting eligibility criteria. Even if you have a valid explanation for your tax issues, mistakes in your written request or supporting documentation can result in denial or delay. Understanding what to avoid will help ensure your case receives full consideration from the Board of Appeals.

Filing Mistakes That Delay or Dismiss Petitions

1. Missing the Filing Deadline
   The most common and severe mistake is failing to file the petition within 90 days of the mailing date listed on the penalty notice. Once this deadline passes, the Board of Appeals will dismiss your request, even if your case has merit. To avoid this, you should submit your petition early and file electronically if you are close to the deadline.
   
2. Submitting an Incomplete Form REV-65
   Leaving required fields blank or failing to attach essential documents can result in rejection. You should complete every applicable section of Form REV-65 and write “N/A” for any sections that do not apply. You should also double-check your entries for accuracy, especially your contact details, tax year, and the penalty amount in dispute.
   
3. Selecting the Wrong Petition Type
   Choosing the incorrect appeal type, such as “Refund” instead of “Reassessment/Review,” can delay the review process. You should always select “Reassessment/Review” when requesting penalty relief.
   

Documentation Errors That Undermine Your Petition

• Providing Insufficient Evidence
  Simply stating you experienced hardship is not enough. You should attach documentation that supports your claims, such as medical records, legal documents, or proof of partial payment.
  
• Using Vague Language
  General statements like “I was sick” or “I had financial difficulties” do not meet the threshold for reasonable cause. You should clearly describe the event, including dates, how it impacted your ability to meet the due date, and what steps you took afterward.
  
• Failing to Address All Penalties
  If multiple penalties were assessed across different tax years or for various reasons, you should respond to each one specifically. Ignoring part of the notice may result in partial denial.
  

Strategic Errors That Lower Success Rates

• Declining a Hearing When It Could Help
  Some cases benefit from a virtual hearing, especially if the situation involves credibility or complex facts. If you are unsure whether a hearing would improve your case, consult a tax attorney or representative.
  
• Ignoring Follow-Up Requests
  The Board of Appeals may request additional information before making a decision. Failing to respond wholly or promptly can result in dismissal. You should monitor communications and reply by the deadline.
  
• Expecting Relief Without Justification
  The board does not automatically grant penalty abatement. You must provide a clear explanation and solid documentation that justifies your request under Pennsylvania law.
  

Avoiding these common errors will significantly increase your chances of obtaining penalty relief and resolving your tax penalties efficiently.

Frequently Asked Questions (FAQs)

How long does the penalty relief process in Pennsylvania take?

The penalty abatement process typically takes three to six months, depending on the complexity of the case. Simple requests with complete documentation are reviewed more quickly, especially if filed electronically. If a hearing is scheduled or the Board of Appeals requests additional information, the process may take up to 12 months. You should monitor communications and respond promptly to avoid unnecessary delays.

Can I request penalty abatement if I have not paid the underlying tax?

You may request penalty relief even if your tax liability is still unpaid. However, interest will continue to accrue while your petition is under review. Showing a reasonable good faith effort to resolve the balance, such as entering into a payment plan or making partial payments before or during the appeal process, may increase the likelihood of the Board of Appeals approving relief.

What happens if the Board of Appeals denies my petition?

If the Board of Appeals denies your request for penalty abatement, you may file a further appeal with the Board of Finance and Revenue within 90 days. The denial notice will include instructions for this next step. Alternatively, you may pay the penalty and consider other legal options if appropriate. You should carefully review the decision to determine whether a second appeal is justified.

Can I file for penalty abatement for multiple tax years at once?

Yes, you may include multiple tax years in a single petition using Form REV-65, as long as each period is listed separately. You should clearly explain each year and include any unique documentation related to the specific penalty. If the facts for each year differ significantly, consider submitting separate petitions to avoid confusion or denial based on unclear arguments.

Do I need a tax attorney to request penalty relief?

You are not required to hire a tax attorney, but professional help may improve your chances of success. Consulting a qualified representative may be beneficial if your case is complex, involves significant tax penalties, or includes multiple tax issues. A professional can help complete Form REV-65, prepare your documentation, and represent you during a hearing before the Board of Appeals if needed.

Will requesting penalty relief affect my credit score or tax standing?

Filing a written request for penalty abatement will not affect your credit score or result in additional audits. However, if the underlying unpaid tax remains unresolved, the Pennsylvania Department of Revenue may initiate collection actions such as liens or levies. These actions could impact your credit if not addressed. Submitting a timely and complete petition shows compliance and may help prevent escalation.

Can I request a refund for penalties I already paid?

You may request a refund for previously paid tax penalties by submitting Form REV-65 and selecting “Refund” as the petition type. You must provide documentation of the payment and explain the circumstances that justify reasonable cause for relief. The same eligibility rules apply, and you must file the request within the allowed time limit to appeal an assessment or request a refund.