First Time Penalty Abatement Qualifications?

[Srumley0001]

In 2016 I claimed the American opportunity credit when I was not eligible to. The irs has since requested that I pay back the refundable portion. They took what I owed out of my tax refund this year. Can I qualify for first fine penalty abatement? If I do, can I ask them to refund the money they deducted from my taxes?

[GiseleD]

Penalty abatement will not cover credits that you have to repay. It will only cover penalties. 

The first-time penalty abatement (FTA) waiver is an administrative waiver that the IRS may grant to relieve taxpayers from failure-to-file, failure-to-pay and failure-to-deposit penalties if certain criteria are met. Individuals and businesses may request FTA for any failure-to-file, failure-to-pay or failure-to-deposit penalty.

You may qualify for administrative relief from penalties for failing to file a tax return, pay on time, and/or to deposit taxes when due under the Service's First Time Penalty Abatement policy if the following are true:

• You didn’t previously have to file a return or you have no penalties for the 3 tax years prior to the tax year in which you received a penalty.
• You filed all currently required returns or filed an extension of time to file.
• You have paid, or arranged to pay, any tax due.