How to Request Penalty Relief for Reasonable Cause

Overview

When you miss a filing or payment deadline, the IRS generally charges penalties and interest. Penalty relief for reasonable cause is a formal way to ask the IRS to waive those penalties if you can show the failure resulted from circumstances outside your control and you acted in good faith. The IRS evaluates these requests case by case and looks for documentation and facts that show you took reasonable steps to comply. See the IRS guidance on penalty relief for more details (IRS – Penalty Relief).

In my practice advising taxpayers for over 15 years, I’ve seen well-documented reasonable cause requests succeed routinely — and poorly supported ones fail — so documentation and clarity matter.

(Authority: IRS, “Penalty Relief”; IRS Publication 556 — Examination of Returns, Appeal Rights, and Claims for Refund.)

When reasonable cause applies

Reasonable cause is not a catch-all. Typical situations the IRS accepts include:

• Serious illness or death in the family that prevented timely action.
• Natural disasters or local emergencies that disrupted filing or payment.
• Fire, casualty, or unavoidable absence.
• Death, serious illness, incapacitation of person responsible for tax matters.
• Erroneous written advice from the IRS or a qualified tax professional in narrow cases.

The IRS evaluates whether the taxpayer exercised ordinary business care and prudence but nevertheless could not comply. If you could have avoided the penalty by ordinary care, reasonable cause will likely be denied.

(See IRS Pub. 556 and IRS penalty-relief FAQs.)

What penalties can be considered

Reasonable cause can apply to many civil penalties, including:

• Failure-to-file penalty
• Failure-to-pay penalty
• Accuracy-related penalties (in some situations)
• Information return penalties (for certain filing failures)

Some penalty types have special rules or separate procedures, so always check the notice you received and follow the IRS instructions for that penalty. For certain refund requests or abatement claims, taxpayers may use Form 843; however, many reasonable cause requests are accepted as a written statement responding to the IRS notice. (IRS guidance)

Step-by-step: How to request penalty relief

1. Read the IRS notice

   The IRS usually sends a notice or letter explaining the penalty, the code, and where to respond. Start by following any instructions on that notice — it often explains where to mail your request or that you can respond online or by phone.

2. Identify the penalty and the tax period

   Clearly state which penalty (include notice number and penalty code) and the tax year or period involved. This helps IRS personnel route and evaluate your request quickly.

3. Prepare a concise reasonable cause letter

   Draft a one- to two-page letter that:

• States the facts: what happened, when, and why.

• Explains how the circumstance prevented compliance.

• Clarifies the steps you took to try to comply (e.g., attempted to file electronically, arranged payments, contacted professionals).

• Lists the documents you are attaching as evidence.

  Avoid emotionally charged language; focus on verifiable facts.

1. Gather supporting documentation

   Typical evidence that strengthens a claim:

• Hospital or medical records (dates of treatment, admissions)

• Death certificate or obituary

• FEMA declarations, insurance loss estimates, or local emergency declarations for disaster claims

• Police reports, court records, or employer statements

• Correspondence with banks, payroll providers, or tax preparers showing attempts to comply

  Original documents are not needed; copies are fine. Redact irrelevant private details if necessary.

1. Choose how to submit

• Respond to the notice: Most taxpayers send their reasonable cause letter and copies of evidence to the address on the IRS notice.
• If you didn’t receive a notice, send the request to the IRS service center that handles the return for the tax year or use the appeals process when instructed.
• For certain refund requests or abatement claims, Form 843 (Claim for Refund and Request for Abatement) may be appropriate. Check current IRS guidance before using Form 843.

1. Keep records and follow up

   Send copies (never originals) and keep a dated copy of everything you mailed. Use certified mail or another trackable method. If you provide documents online in response to a notice, save confirmation receipts.

Example reasonable cause letter (short template)

[Use this as a starting point — tailor to your facts]

• Taxpayer: Jane Q. Taxpayer (SSN: XXX-XX-1234)
• Tax period: 2023 individual income tax return (Form 1040)
• IRS notice number: CP14 (or as shown on letter)

Body:

“I am requesting abatement of the failure-to-file and associated penalties assessed for the 2023 tax year. I was hospitalized from June 1–June 21, 2024, and was medically unable to prepare or sign my return. Attached are hospital admission and discharge documents showing the dates of treatment. During my hospitalization my power of attorney was not in place. As soon as I was discharged on June 21, I contacted my tax preparer on June 23 and filed the return on July 5, 2024.

I made reasonable efforts to comply and request that the assessed penalties be abated under the IRS reasonable cause standard. Attached: hospital records, correspondence with tax preparer, and copy of filed return.”

Sign and date the letter. Attach copies of documentation.

Evidence checklist

• [ ] Copy of IRS notice (front and back)
• [ ] Written statement (reasonable cause letter)
• [ ] Medical records, death certificate, or employer letters
• [ ] Disaster declarations, insurance claims, or FEMA IDs
• [ ] Bank or payment records showing attempts to pay or schedule payments
• [ ] Correspondence with preparer or financial institution

Common reasons requests are denied

• Insufficient documentation: vague statements without supporting records.
• Delay: waiting too long after the penalty assessment to request relief.
• Lack of good-faith effort: no evidence you tried to file or pay.
• Businesscare standard not met: the taxpayer could have taken actions that would have prevented the noncompliance.

If denied, the IRS will send a letter explaining the denial and you generally have appeal rights.

Alternatives and additional options

• First-Time Penalty Abatement (FTA): If you meet the FTA criteria (clean compliance history for prior years), you may qualify for administrative first-time abatement instead of reasonable cause. See our glossary entry on “First-Time Penalty Abatement Relief” for eligibility details.

• Disaster or hardship relief: If your case involves a federally declared disaster, IRS disaster relief can provide expedited or automatic relief; gather FEMA or local disaster documentation.

• Appeals: If abatement is denied, you can request appeal rights and take your case to the IRS Appeals Office.

Related FinHelp articles:

• The Basics of Penalty Abatement: Reasonable Cause vs Administrative Waivers — https://finhelp.io/glossary/the-basics-of-penalty-abatement-reasonable-cause-vs-administrative-waivers/

• Crafting a Convincing Reasonable Cause Letter for Penalty Relief — https://finhelp.io/glossary/crafting-a-convincing-reasonable-cause-letter-for-penalty-relief/

• How to Request Penalty Abatement: Evidence, Forms, and Timing — https://finhelp.io/glossary/how-to-request-penalty-abatement-evidence-forms-and-timing/

Timeline and expectations

Processing times vary. Simple requests resolved by mail may take several weeks to a few months. Complex cases or appeals can take longer. If you owe taxes, interest continues to accrue even if penalties are abated; abatement does not eliminate interest unless you pursue a refund claim where appropriate.

When to get professional help

Consider hiring a tax professional if:

• Your case involves large penalties or large tax amounts.
• You need help gathering or interpreting documentation.
• The underlying tax return or accuracy penalties are under examination.
• You prefer representation in appeals or collection discussions.

In my experience, a short, well-documented request often succeeds without prolonged negotiation. However, cases with mixed legal issues or large dollar amounts benefit from professional representation.

FAQs (brief)

Q: How long do I have to request relief?
A: Generally respond promptly to the notice. There’s no single deadline for all reasonable cause requests, but delays reduce the chance of success; follow the notice for any deadline.

Q: Will the IRS waive interest if penalties are abated?
A: Interest generally continues on unpaid tax. Abatement of penalties does not automatically remove interest; consult IRS guidance or a tax pro about refund claims.

Q: Is a tax preparer’s error reasonable cause?
A: A preparer’s negligence is rarely reasonable cause. If you reasonably relied on incorrect written advice from a tax professional or the IRS in narrow circumstances, it may be considered, but this is fact-specific.

Sources and further reading

• IRS — Penalty Relief (FAQ and guidance).
• IRS Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund.
• IRS Notice and Appeals procedures (see your specific IRS notice for instructions).

This article is educational and not tailored tax advice. For decisions that affect your tax position, consult a qualified tax professional familiar with your circumstances.