What is a Penalty Waiver for Reasonable Cause and How Do You Request It?

A penalty waiver for reasonable cause is a formal request to the IRS asking that assessed penalties be abated because the taxpayer had a valid, documented reason for failing to comply. The IRS evaluates whether the taxpayer exercised ordinary business care and prudence under the circumstances and whether the taxpayer’s failure was due to events beyond their control rather than willful neglect (see IRS guidance on penalty relief). In practice, a persuasive request is concise, factual, and supported by corroborating documents.

How the IRS treats reasonable-cause requests

The IRS grants relief in several ways, including:

  • First-Time Penalty Abatement (FTA) for qualifying taxpayers with a clean compliance history.
  • Reasonable-cause abatement when documented, compelling circumstances explain the failure to file, pay, or deposit on time.
  • Statutory relief or other administrative programs in limited situations.

First-Time Abatement is an administrative waiver that often applies to failure-to-file or failure-to-pay penalties if you meet the IRS criteria (generally compliant for the prior three years and not previously abated for FTA) (IRS penalty relief pages). Reasonable-cause requests are evaluated case-by-case and require a clear narrative plus documentation. When a formal abatement or refund of assessed penalties is requested, taxpayers commonly use Form 843, “Claim for Refund and Request for Abatement,” or submit a written statement to the IRS office that issued the notice (see Form 843 information at IRS.gov).

When to ask for a penalty waiver

Consider requesting a waiver when a penalty results from:

  • Serious medical events or prolonged hospitalization.
  • Death in the immediate family that disrupted tax filing or payments.
  • Natural disasters with documented federal or state declarations.
  • Identity theft or fraud that prevented timely filing or payment.
  • Reasonable reliance on a competent tax professional who made an isolated mistake (not fraud or neglect by the taxpayer).
  • Postal or delivery failures evidenced by carrier records.

Not every claim succeeds; the IRS will not excuse willful neglect or intentional tax avoidance. The key legal standard is whether the taxpayer acted with ordinary business care and prudence.

Step-by-step: How to prepare and submit a request

  1. Review the penalty notice carefully. Identify the penalty type, the tax period, and any deadlines to respond.
  2. Collect documentation that supports your reason: medical records, hospital discharge notes, death certificates, disaster or FEMA documents, police or fire reports, proof of hospital stays or travel disruptions, correspondence with a tax preparer, and records of attempts to file or pay (bank statements, cancelled checks, shipping receipts).
  3. Choose the correct filing method:
  • Use Form 843 to request abatement or refund of certain penalties (see IRS Form 843 page: https://www.irs.gov/forms-pubs/about-form-843).
  • For failure-to-file or failure-to-pay penalties, you can request FTA by contacting the IRS by phone or in writing; many taxpayers begin by calling the IRS or adding a written statement when responding to a penalty notice.
  • If the penalty notice includes instructions for protest or a specific mailing address, follow those instructions.
  1. Draft a clear, chronological statement describing what happened, why you could not comply, and what steps you took to comply as soon as circumstances allowed. Keep the tone factual and avoid emotional language; include dates and specific actions.
  2. Attach supporting evidence and a copy of the penalty notice or IRS letter.
  3. Mail the packet via certified mail (keep tracking and delivery receipts) or follow the IRS electronic submission processes when available. Keep copies of everything.
  4. Track the case and follow up. Note the IRS contact information and any case or notice numbers.

What to include in your written reasonable-cause statement

A strong statement answers these questions:

  • What happened and on what dates?
  • How did the event prevent timely compliance?
  • What steps did you take to meet obligations once you could?
  • Why the event was beyond your control and not negligence.

Sample short paragraph (use your facts):

“From May 12 to June 8, 2024 I was hospitalized (medical records attached) and was unable to gather the records necessary to timely file my 2023 return. After discharge, I engaged [tax preparer name] and filed on August 10, 2024. I have a history of timely filing for the previous three years (see attached copies). I request abatement of the failure-to-file penalty due to reasonable cause.”

Attach corroborating documents immediately after the statement. Documents that contain private health data may be redacted where not required for verification, but keep originals.

Evidence that strengthens a reasonable-cause request

  • Medical records, hospital discharge summaries, and physician statements.
  • Death certificate and obituary when a family death caused disruption.
  • FEMA or other government disaster declarations, insurance claims, and repair invoices for natural-disaster cases.
  • Records showing attempts to pay or file (bank transcripts, payment confirmation, cancelled checks, electronic receipts).
  • Written correspondence with a tax professional showing you provided accurate information and the preparer made an error.
  • Proof of identity-theft reports (police report, IRS Identity Theft Affidavit Form 14039).

For more detail on compiling evidence see our guide on “Preparing a Penalty Abatement Request: What Evidence Helps.” (Internal link: Preparing a Penalty Abatement Request: What Evidence Helps — https://finhelp.io/glossary/preparing-a-penalty-abatement-request-what-evidence-helps/)

Timelines and response expectations

Processing times vary. Simple FTA requests sometimes resolve in a few weeks; reasonable-cause requests can take several weeks to a few months depending on complexity and IRS workload. If you request a refund as part of the abatement, processing may be longer. Keep records of your submission and any correspondence.

If the IRS denies your request, you have options: request reconsideration, file a formal appeal with the IRS Office of Appeals, or, in cases causing significant economic hardship or systemic delays, contact the Taxpayer Advocate Service for assistance (see taxpayer advocate website: https://www.taxpayeradvocate.irs.gov).

Common mistakes to avoid

  • Submitting a vague or unsupported statement without dates, actions taken, or attached evidence.
  • Waiting too long to request relief—make your request as soon as practicable after the event.
  • Confusing reliance on a tax preparer with willful negligence; the IRS evaluates reliance claims carefully.
  • Sending originals of irreplaceable documents—use certified copies where possible and keep originals in your files.

Special programs and differences to know

  • First-Time Penalty Abatement (FTA): an administrative relief option that can be easier to obtain if you meet the criteria (clean recent compliance history). It is not automatic; you must request it. See IRS penalty relief resources for current eligibility rules.
  • Statutory relief: a limited number of relief rules are set in law or regulation and apply in special circumstances.
  • State tax authorities: many states offer similar relief but follow different processes and forms—don’t assume a federal waiver applies to state penalties.

For related step-by-step documentation and a checklist, see our internal guide “How to Request Penalty Relief: Step-by-Step Documentation.” (Internal link: How to Request Penalty Relief: Step-by-Step Documentation — https://finhelp.io/glossary/how-to-request-penalty-relief-step-by-step-documentation/)

When to hire a professional

In my practice, reasonable-cause requests are straightforward in many medical or disaster cases but become complex when tax preparer negligence, business records, or multiple penalty types are involved. Consider hiring an enrolled agent, CPA, or tax attorney if:

  • Multiple years and penalties are involved.
  • The dollar amounts are large.
  • You need to file an appeal or prepare for collection activity.

A practitioner can draft persuasive statements, assemble supporting documentation, and represent you in appeals or collection discussions.

Appeal rights and further steps after denial

If your request is denied, the IRS denial letter will explain why and outline appeal rights. You can:

  • Ask the IRS for reconsideration with additional evidence.
  • File a formal appeal with the IRS Office of Appeals (follow instructions on the denial letter).
  • Contact the Taxpayer Advocate Service if you face immediate economic harm or systemic delays (https://www.taxpayeradvocate.irs.gov).

Final practical tips

  • Act promptly. The sooner you request relief after the event, the better.
  • Be concise, factual, and document everything.
  • Keep copies of all submissions and proof of delivery.
  • If possible, show a pattern of prior compliance—history helps.

Sources and further reading

Disclaimer: This article is educational and does not constitute tax, legal, or accounting advice. For guidance specific to your situation, consult a qualified tax professional or attorney.