Quick answer

You qualify for relief from penalty assessments when you can show one of three paths the IRS recognizes: First-Time Penalty Abatement (FTA), reasonable cause, or a statutory/administrative exception. Each path has specific facts and documents the IRS will review; meeting those standards can reduce or remove failure-to-file, failure-to-pay, and, in some cases, failure-to-deposit penalties (IRS, “Penalty Relief”).

How the IRS evaluates eligibility

  • First-Time Penalty Abatement (FTA): available as an administrative waiver when the taxpayer has a clean penalty history (typically no penalties for the prior three tax years), has filed required returns, and has paid—or arranged to pay—any tax due. FTA most commonly applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties (IRS, “Penalty Relief”).
  • Reasonable cause: granted when the taxpayer shows the failure was due to circumstances beyond their control (serious illness, death, fire, natural disaster, inability to obtain records, or similar events). You must provide contemporaneous documentation that explains what happened and why it prevented compliance.
  • Statutory or administrative exceptions: include cases covered by specific laws or IRS administrative relief (e.g., certain disaster relief programs, identity-theft victims, or bankruptcy situations). These are fact-sensitive and usually require proof tied to the exception.

(Authoritative sources: IRS Penalty Relief and Publication 556.)

Step-by-step checklist to determine if you qualify

  1. Identify the exact penalty type and assessment date on your IRS notice.
  2. Review your prior compliance history (look back 3 years for FTA considerations).
  3. Gather documentation that supports your claim (medical records, hospital bills, death certificates, insurance claims, disaster declarations, bank statements, repair orders, correspondence showing attempts to file/pay). For examples of useful documentation, see When Penalty Relief Is Likely: What Documentation Helps and Preparing a Reasonable Cause Letter for Penalty Abatement: Sample Template.
  4. Decide the route: request FTA (if eligible), request reasonable-cause abatement with a written explanation, or cite a statutory/administrative exception.
  5. Submit the request: many abatement requests can be made by phone or in writing; some cases use Form 843 or a formal written claim—your tax professional can advise the correct method. Keep a copy of everything you send.

How to make a convincing reasonable-cause request

  • Tell a clear, chronological story: explain what happened, when, and how it prevented compliance.
  • Attach corroborating documents (medical records, police/fire reports, FEMA declarations, or communications showing attempts to file/pay).
  • Show steps you took to comply once the problem was resolved and any arrangements to pay taxes due.
  • If you had a good compliance history, emphasize it—consistency helps. See How to Ask the IRS for a Penalty Abatement: Evidence That Works for evidence strategies.

Typical timelines and follow-up

  • Simple requests are often reviewed in about 30 days; complex cases can take several months. If you disagree with the decision, you can appeal with the IRS Office of Appeals or pursue a refund claim where appropriate (see IRS guidance).

Real-world examples (anonymized)

  • Example 1: A taxpayer with a long history of timely filings missed a deadline once because of an emergency surgery. After submitting hospital records and a reasonable-cause letter, the IRS abated the failure-to-file penalty.
  • Example 2: A small-business owner affected by a federally declared disaster qualified for administrative relief once the disaster area and dates matched the taxpayer’s missed deposits.

Common mistakes to avoid

  • Waiting too long to request relief—file the request as soon as you can and keep records of dates you contacted the IRS.
  • Sending vague statements without supporting evidence; the IRS needs concrete documentation.
  • Assuming penalties can’t be challenged; many taxpayers qualify for relief but don’t ask.

Practical tips from my experience

  • Keep detailed records of any event that could affect tax compliance.
  • If eligible for FTA, request it first—it’s faster and often granted administratively.
  • If you’re unsure what to submit, start with a concise reasonable-cause letter and offer to provide more documents on request.
  • Work with a tax professional for complex cases—especially employment taxes or trust-fund penalties.

Where to get authoritative help

Useful internal resources:

Professional disclaimer

This article is educational and based on general IRS rules and my professional experience. It is not individualized tax advice. For guidance specific to your facts, consult a qualified tax professional or attorney.