Nearly a million and a half Americans missed out on $181 million in tax-penalty relief because the Internal Revenue Service (IRS) failed to inform them about a possible waiver.

Under the tax code, penalties can be assessed for not filing a tax return or for failing to pay the full amount shown. But Americans who have paid on time and in full for the previous three years can ask for the penalties to be waived.

The problem is that the IRS did not bother to tell 1.45 million tax filers in 2010 about this opportunity, known as the First-Time Abate. The reason for this waiver, according to the IRS, is to reward past tax compliance and promote future tax compliance.

J. Russell George, the Treasury Inspector General for Tax Administration (TIGTA), whose office discovered the IRS failure, said in a statement: “Penalty waivers should not be granted only to taxpayers or preparers with knowledge of IRS processes.”

“If the IRS does not administer these and other penalties fairly and accurately, taxpayers’ confidence in the tax system will be jeopardized,” George added.

The TIGTA recommended that the First-Time Abate waiver would be better used as a compliance tool if the IRS ensured that taxpayers were aware of the potential to receive the waiver based on their past compliance history, while making receipt of the waiver contingent upon taxpayers paying their current liabilities.

The IRS actually agreed with the recommendations and said its officials are currently taking appropriate corrective actions.

“We will continue to review our policies for the application of First-Time Abate and reasonable cause to determine the best ways to assist taxpayers with their federal tax payment obligations. This includes ensuring appropriate communication to taxpayers,” said Faris R. Fink, commissioner of the IRS’s Small Business/Self-Employed Division.