How to Prove Reasonable Cause for Late Filing or Late Payment

Quick overview

If you missed a tax filing or payment deadline, the IRS can impose penalties that grow quickly. The IRS may remove (abate) those penalties if you can show “reasonable cause” — a documented reason beyond your control that prevented timely compliance and that you acted in good faith to comply when able. In my 15+ years as a CPA and CFP®, I’ve guided clients through successful reasonable-cause requests by focusing on thorough documentation, clear explanations, and timely submission. This article explains what qualifies, how to build your case, and next steps if your request is denied.

(Source: IRS guidance on penalty relief — https://www.irs.gov/penalties)

Who can qualify for reasonable-cause relief?

Individuals, small businesses, estates, and other entities can seek reasonable-cause relief for many types of penalties (failure to file, failure to pay, estimated tax penalties, information return penalties, etc.). The IRS evaluates each request on its facts and circumstances. Common qualifying situations include:

• Serious illness, injury, or death of the taxpayer or immediate family member.
• Natural disasters or civil disturbances that prevent access to records or tax preparers.
• Fire, theft, or casualty that destroyed records.
• Unavoidable absence or incarceration.
• Erroneous advice from a tax professional may be considered if the reliance was reasonable and substantiated.

The IRS emphasizes the taxpayer’s intent and good-faith efforts to comply; mere financial difficulty usually does not qualify unless tied to a larger, uncontrollable disruption. (See IRS Reasonable Cause examples: https://www.irs.gov/penalties/penalty-relief)

What evidence and documentation the IRS expects

The burden of proof is on you. The IRS looks for contemporaneous evidence showing the event and that it directly caused the lateness. Useful documents include:

• A concise, dated written statement explaining what happened, why you couldn’t file or pay, and what you did to try to comply.
• Official records: hospital or medical records, death certificate, police report, insurance claim, FEMA declaration, or court documents.
• Proof of timely efforts: copies of drafts, appointment confirmations with your tax preparer, emails, canceled checks, attempted electronic payments, or call logs with the IRS or banks.
• Business records that show inability to operate (e.g., closure notices, photos of damage, vendor or bank statements).
• Communications from third parties (employer letters, statements from an attorney or CPA) supporting your claim.

Create a single organized packet (PDF preferred) with a cover letter that lists exhibits. Label items clearly (Exhibit A, B, etc.).

Step-by-step: Building and submitting your request

1. Read your IRS notice carefully. The notice usually includes instructions for how to respond and contact information. Some notices include an appeal 30‑day window — follow any deadlines printed on the notice.

2. Draft a concise written statement. State the dates, what occurred, how it prevented filing/paying, the actions you took, and whether you paid or set up a payment plan. Keep it factual and avoid emotional language.

3. Gather supporting documents. Use the checklist above and include anything contemporaneous that corroborates your story.

4. Choose the correct submission path:

• Reply to the IRS notice using the address or online response option on the notice.
• Call the phone number on the notice for guidance.
• For some monetary penalty abatement requests or refund claims, use Form 843 (Claim for Refund and Request for Abatement) — confirm applicability on the IRS Form 843 instructions: https://www.irs.gov/forms-pubs/about-form-843.
• If you qualify for First‑Time Abatement (an administrative relief for taxpayers meeting specific criteria), follow the procedural guidance in IRS materials. See our internal guide on first‑time penalty abatement: “First-Time Penalty Abatement Relief” (https://finhelp.io/glossary/first-time-penalty-abatement-relief/).

1. Keep copies and create a timeline of your submissions and any conversations with the IRS or tax professionals.

2. If the IRS denies relief, follow the appeal instructions on the denial letter — you may request an appeal or involve the Taxpayer Advocate Service if you face financial hardship or an unresolved systemic issue (https://www.taxpayeradvocate.irs.gov/).

Sample reasonable-cause letter (concise template)

[Use your letterhead or plainly titled: “Request for Penalty Abatement — Reasonable Cause”]

Taxpayer: [Name]
Tax year(s): [YYYY]
SSN/EIN: [XXX-XX-XXXX / XX-XXXXXXX]
Notice ID: [from IRS notice]

I request abatement of the penalty assessed for [failure to file/failure to pay] for tax year [YYYY]. On [date], I experienced [brief statement of event — e.g., hospitalization, house fire, natural disaster]. This event prevented me from [filing/paying] by the due date. I acted in good faith to comply: [describe steps taken, e.g., contacted preparer on date, made partial payment, requested extension].

Enclosed: Exhibit A — medical records; Exhibit B — hospital billing; Exhibit C — copy of draft return; Exhibit D — FEMA disaster declaration (as applicable).

I certify under penalty of perjury that the facts above are true and complete to the best of my knowledge.

Sincerely,

[Name, signature, phone, email]

Common mistakes to avoid

• Submitting only a verbal explanation without contemporaneous documentation.
• Waiting too long to respond — missing notice deadlines can limit options.
• Relying solely on general hardship claims without linking the hardship to an inability to file or pay.
• Failing to follow the submission instructions on the IRS notice (wrong address or form).

Special situations and practical notes

• Natural disasters: If a federally declared disaster affected you, the IRS often provides extended filing/payment relief. Include FEMA or other official declarations. See our guide to penalty relief for natural disaster victims.

• First‑time penalty abatement: If you have a clean compliance history, you may qualify for administrative relief without proving the kinds of events shown above. Review eligibility criteria before applying. Our internal article on How to Get Penalty Abatement explains options and when to use them.

• Relying on a tax professional: Reasonable reliance on incorrect advice from a tax preparer may support reasonable cause if you can show that the preparer’s advice was relied upon in good faith and that you provided accurate facts. Keep engagement letters, emails, and the preparer’s analysis.

If your request is denied: appeals and next steps

1. Read the denial letter carefully — it will explain why relief was denied and the steps to appeal.
2. File a timely administrative appeal with the IRS Office of Appeals as instructed. Appeals can overturn denials when the facts are persuasive or when the IRS applied policy incorrectly.
3. If you cannot resolve the matter through Appeals and you suffer economic hardship caused by the penalties, contact the Taxpayer Advocate Service for assistance: https://www.taxpayeradvocate.irs.gov/.
4. Consider hiring a tax professional or tax attorney for complex cases or large penalties; professional representation increases the chance of a favorable outcome in many situations.

Timeline and expectations

Timing varies: the IRS may take weeks to months to review a reasonable‑cause package. Expect to receive confirmation of receipt, and keep following up (documenting each contact). If you’re facing collections (levies, liens) while waiting, proactively set up a payment plan or request an Offer in Compromise if eligible to reduce immediate financial harm.

Practical tips from my practice

• Start building evidence the day the event occurs — contemporaneous documents are the strongest proof.
• Organize materials chronologically and include a short index.
• When appropriate, pay the tax due and then file for abatement to reduce interest accrual. You can file for penalty abatement after payment; a successful abatement will refund penalty amounts or reverse recorded penalties.
• Use certified mail or a tracked electronic submission and save proof of delivery.

Resources

• IRS — Penalty Relief and Reasonable Cause: https://www.irs.gov/penalties
• IRS — About Form 843 (Claim for Refund and Request for Abatement): https://www.irs.gov/forms-pubs/about-form-843
• Taxpayer Advocate Service: https://www.taxpayeradvocate.irs.gov/
• FinHelp articles: How to Get Penalty Abatement (https://finhelp.io/glossary/how-to-get-penalty-abatement/), First‑Time Penalty Abatement Relief (https://finhelp.io/glossary/first-time-penalty-abatement-relief/), Penalty Relief for Natural Disaster Victims (https://finhelp.io/glossary/penalty-relief-for-natural-disaster-victims/)

Professional disclaimer: This article is educational and does not constitute legal, tax, or financial advice. For tailored guidance, consult a qualified tax professional or attorney.

If you’d like, I can review a draft of your reasonable‑cause letter and suggest edits based on IRS expectations.