How to Request IRS Penalty Relief: Step-by-Step Documentation Guide

Requesting penalty relief is most successful when you present a clear, well-documented case that ties the missed filing or payment to circumstances beyond your control. In my practice working with individuals and small businesses, the cases that win an abatement are the ones that show a timeline, corroborating evidence, and a concise explanation of why normal compliance was impossible.

This guide walks through each step, the evidence the IRS values, alternatives to Form 843, follow-up actions, and what to do if the IRS denies your request. Authoritative IRS guidance on penalty relief and Form 843 is available at the IRS penalty relief page and the Form 843 page (see Resources at the end).

At-a-glance: Who should use this guide

  • Individuals or business owners assessed penalties for late filing, late payment, or accuracy-related issues.
  • Taxpayers who can document events such as serious illness, natural disasters, military service, or unavoidable absence.
  • Anyone who wants to prepare a persuasive written request or Form 843 packet before contacting the IRS.

1) Identify the specific penalty and statutory basis

Start by confirming exactly what penalty you were assessed (failure to file, failure to pay, accuracy-related penalty, trust fund recovery penalty, etc.). The IRS notice that accompanies the penalty lists the code section and amount. Note the tax year, notice date, and the IRS notice number on every page.

Why this matters: The documentation and the relief route differ by penalty type. For example, first-time penalty abatement (FTA) has eligibility rules that differ from a reasonable-cause claim. See FinHelp’s primer on How to Request Penalty Abatement for First-Time Penalty Relief for FTA specifics.

2) Choose the correct relief option

Common options include:

  • First-time penalty abatement (FTA) — an administrative waiver for taxpayers who are otherwise compliant.
  • Reasonable cause (written statement or Form 843) — shows circumstances prevented compliance (illness, disaster, death in family, etc.).
  • Statutory exceptions (specific code provisions) or disaster relief (IRS declarations after natural disasters).

If you aren’t eligible for FTA or a statutory exception, prepare a reasonable cause packet. For small-business- and disaster-related claims, see our piece on Penalty Relief After Disasters and Hardship: What Evidence the IRS Wants.

3) Gather the documentation the IRS wants to see

Successful requests hinge on credible, contemporaneous documents. The IRS looks for objective evidence that explains and corroborates the taxpayer’s inability to comply.

Essential types of documentation:

  • Chronology: A dated timeline of events explaining what happened, when, and how it caused noncompliance.
  • Medical records: Hospital admission/discharge dates, doctor statements, prescription records.
  • Employment records: Termination letters, furlough notices, layoff dates, or unemployment claims.
  • Disaster documentation: FEMA declarations, insurance claims, repair estimates, photographs, repair receipts.
  • Proof of payment attempts: Bank statements, canceled checks, payment confirmation numbers.
  • Communications logs: Copies of correspondence with banks, employers, or the IRS that show efforts to comply.
  • Power of attorney (Form 2848) if a representative acts on your behalf.

Best practice: Include a short cover letter (one page) that summarizes the request, the penalties being challenged, and a numbered list of attachments. Numbered exhibits make it easier for the IRS reviewer to cross-check your evidence.

4) Complete the right form or write a concise reasonable-cause letter

  • Form 843: Used to request abatement of certain penalties and to claim refunds. Complete all relevant sections, sign, and attach proof. Follow IRS instructions on the form page (IRS Form 843) for where to mail it or whether to submit with the tax return.

  • Reasonable-cause letter: If Form 843 is not appropriate (or you also want to add a narrative), write a one- to two-page letter that:

  • Identifies the taxpayer and notice number(s).

  • States the specific penalty you want abated and the tax period.

  • Explains the cause and the timeline.

  • Lists the attached evidence as numbered exhibits.

  • Includes a declaration that the facts are true under penalty of perjury (optional but authoritative).

Sample opening line for a reasonable-cause letter: “I am requesting abatement of the failure-to-pay penalty for tax year 20XX (Notice CPXXXX) due to hospitalization from [date] to [date], which prevented timely payment despite attempts to pay.” Keep the tone factual and avoid emotional language.

5) Submit the request properly

  • If you received an IRS notice, follow the mailing or fax instructions on the notice for contesting the penalty. Many notices allow you to mail supporting documents to the address shown.
  • Mail Form 843 and attachments to the address on the form or the notice. If you have a representative, include Form 2848.
  • Keep copies of everything sent and use trackable mail or certified delivery when possible.

In my practice, sending a short cover letter with a numbered exhibit list and a copy of the IRS notice reduces processing delays.

6) Track timelines and follow up

Typical processing times vary. Simple requests may be resolved in 30–60 days; complex cases or those requiring research can take 90 days or longer. The IRS sometimes issues an interim acknowledgement; other times you’ll only hear the final decision.

If you don’t receive a response within 90 days, contact the IRS phone number on the notice and reference your mailing date, the notice number, and the certified mail tracking number. If your case is very time-sensitive, consider hiring a tax professional who can escalate via IRS practitioner channels.

7) If the IRS denies your request

A denial will include instructions for your next steps. Options typically include:

  • Requesting an appeals conference with the IRS Office of Appeals.
  • Providing additional evidence and asking for reconsideration.
  • Paying the penalty under protest and filing a refund claim (rare and requires careful planning).

Appeals are a formal administrative review and can succeed if you provide new or clearer evidence showing reasonable cause. See our explainer on How to Document Reasonable Cause for Penalty Relief for examples of persuasive documentation.

Practical tips that improve success rates

  • Be concise and organized: Start with a one-page summary, then attach supporting documents as numbered exhibits.
  • Corroborate statements with independent records (medical, insurance, employer, bank records).
  • Show good-faith efforts: Copies of partial payments, attempted electronic payments, or scheduled payment plans demonstrate intent to comply.
  • Know first-time abatement rules: If eligible, FTA can be the quickest route; document your compliance history.
  • Don’t wait to file returns: Even if you can’t pay, file timely to avoid additional failure-to-file penalties where possible.

In my experience, claims that combine a clear timeline, contemporary records, and proof of reasonable efforts to comply are far more likely to be granted.

Common mistakes to avoid

  • Submitting vague statements without supporting documents.
  • Forgetting to include the notice number or tax period on every page.
  • Relying on hearsay instead of documented proof.
  • Missing mailing or submission instructions on the IRS notice.

Example documentation checklist (ready to print)

  • Copy of the IRS notice (all pages)
  • One-page cover letter summarizing the request
  • Completed Form 843 (if applicable)
  • Chronology/timeline of events (dated)
  • Medical records, employer letters, or disaster declarations (as applicable)
  • Bank statements or payment confirmations
  • Proof of certified mail or e-file receipts

Appeals and next-level options

If denied, consider:

  • Administrative appeal to the IRS Office of Appeals.
  • Seeking a Collection Due Process hearing if the penalty is linked to a collection action.
  • Consulting a tax attorney or enrolled agent to evaluate litigation (very rarely necessary for penalty abatement alone).

Resources and authoritative references

Related FinHelp articles you may find helpful:

Professional disclaimer: This article is educational and based on general practice experience. It is not personalized tax advice. For guidance specific to your situation, consult a qualified tax professional (CPA, EA, or tax attorney).

If you want, I can draft a one-page sample reasonable-cause letter tailored to a common scenario (hospitalization, job loss, or natural disaster) that you can adapt for your packet.