Overview
When the IRS assesses penalties for late filing, late payment, or other compliance failures, you can request relief if you can demonstrate “reasonable cause.” The IRS defines reasonable cause as circumstances beyond your control that made compliance impossible or impracticable despite ordinary care. The strongest submissions combine a concise narrative with dated, corroborating documents (see IRS Form 843 for many penalty requests: https://www.irs.gov/forms-pubs/about-form-843).
In my practice working with individuals and small businesses for 15+ years, the cases that succeed are the ones that present a clear timeline, show steps the taxpayer took to comply, and include objective evidence (medical records, insurance claims, bank records, contemporaneous correspondence). If the IRS denies relief, you can generally appeal that decision — see our guide on how to request penalty abatement for details.
Key evidence categories (the checklist)
- Identity & chronology
- Copy of the tax return(s) or notice you received, and a simple, dated timeline showing key events (missed dates, illness dates, disaster dates, communications).
- Medical and personal emergency documentation
- Hospital records, discharge summaries, surgeon notes, physician letters, prescriptions, and hospital billing statements showing dates and diagnosis.
- Disaster or property-loss proof
- Photos of damage, FEMA or state disaster declarations, insurance claims, repair estimates, and contractor receipts.
- Financial records
- Bank statements, canceled checks, payroll records, merchant statements, cash-flow snapshots or business bookkeeping that show inability to pay or manage filings.
- Proof of attempted compliance
- Postmarked envelopes, e‑file receipts, tax preparer engagement letters or calendars, cancelled checks for tax payments, or online payment confirmations.
- Correspondence and third‑party statements
- Letters and notices from the IRS, vendors, lenders, employers, or insurers; sworn affidavits from third parties (e.g., a treating physician or business partner) that corroborate your story.
- Administrative documents
- Power of Attorney (Form 2848) if a representative is acting for you; proof of identity when required.
- Miscellaneous corroboration
- Police reports, death certificates, court records, travel records (airline itineraries), employer leave-of-absence paperwork, or any contemporaneous documents tied to the event.
How to assemble the submission (practical steps)
- Start with a short cover letter (1–2 pages)
- State the tax period, penalty type, IRS notice number, and the specific relief requested (reasonable-cause abatement or other administrative relief). Provide a concise timeline with dates and short explanations.
- Attach supporting documents in order
- Label exhibits (Exhibit A, B, C) and include a one-line caption for each (e.g., “Exhibit B — Hospital discharge summary, 10/12/2024”). Always submit copies, not originals.
- Explain what you did to comply
- Show evidence of ordinary care: attempted payments, contact with tax pros, or steps taken to reconstruct records—this demonstrates you acted responsibly.
- Identify the relief method
- Use Form 843 where applicable (see IRS guidance: https://www.irs.gov/forms-pubs/about-form-843). For some penalties (like certain employment-tax penalties) other procedures apply—consult IRS pages or a tax professional.
- Submit and confirm delivery
- Mail with tracking and keep proof of mailing; some issues can be started by phone, but paper with supporting docs is usually stronger. Keep a full copy of everything you submit.
Common mistakes to avoid
- Fuzzy or unsigned narratives. Provide a clear, signed statement with exact dates.
- Weak chronology. If dates don’t line up, the IRS has little reason to grant relief.
- Too little corroboration. Claims without independent documents or third‑party statements are frequently denied.
- Submitting originals. Send copies and retain originals in a safe place.
Timing and appeal notes
- There’s no single “deadline” for every reasonable-cause request: submit as soon as you have the facts and after you receive an IRS notice. For refund claims tied to penalty payments, different statutes of limitations may apply—consult IRS guidance or a tax professional.
- If your request is denied, you can appeal the decision through the IRS appeals process or pursue administrative remedies. See our pages on how to request penalty abatement for the next steps and appeals options:
- Preparing a Reasonable Cause Penalty Abatement Letter: Evidence That Matters — https://finhelp.io/glossary/preparing-a-reasonable-cause-penalty-abatement-letter-evidence-that-matters/
- How to Request Penalty Abatement from the IRS — https://finhelp.io/glossary/how-to-request-penalty-abatement-from-the-irs/
Professional tips
- Be concise and factual: a two‑page narrative plus exhibits is usually more effective than a long emotional letter.
- Date everything and show the chain of events. The IRS responds to timelines and documentation, not emotion.
- Consider the First‑Time Penalty Abatement (FTA) administrative relief if you meet the criteria—FTA can be faster but requires different documentation; see our overview on building a reasonable-cause request for distinctions: https://finhelp.io/glossary/penalty-abatement-essentials-building-a-strong-reasonable-cause-request/
- If you’re uncomfortable assembling the packet, hire a CPA, EA, or tax attorney; in my experience, a well-organized submission significantly improves approval odds.
Sources & further reading
- IRS, About Form 843 (Claim for Refund and Request for Abatement): https://www.irs.gov/forms-pubs/about-form-843
- IRS, Penalty Relief pages and guidance (see the IRS site for current procedures and examples)
Disclaimer
This article is for educational purposes and does not constitute personalized tax advice. Rules change and individual circumstances vary—consult a qualified tax professional before relying on this information.
