Does the IRS waive penalties?

A common waiver is a First-Time Penalty Abatement for “first-time” offenders if , in general terms, the taxpayer
had no penalties for the previous three tax years, and
has filed all required returns currently due and
has paid – or arranged to pay- all tax currently due.

In some cases, after a three-year period of being penalty-free, a taxpayer would be eligible for another or new “First Time” Penalty Abatement.

Otherwise,  the IRS does not generally waive penalties. If the IRS is convinced that the penalties are uncollectible because the taxpayer hasn’t adequate assets or probability of being able to pay in the future, the penalty might possibly be abated through an Offer In Compromise.