Overview

Reasonable cause lets taxpayers seek relief when penalties arise from circumstances beyond their control. The IRS examines whether the taxpayer exercised ordinary business care and prudence but still could not meet a tax obligation. This is an administrative remedy and not automatic — you must explain and prove the facts that prevented timely filing or payment. (See IRS guidance at https://www.irs.gov/penalties/penalty-relief and Publication 556: https://www.irs.gov/pub/irs-pdf/p556.pdf.)

How does the IRS decide reasonable cause?

The IRS evaluates reasonable cause on the facts and circumstances. Common factors it considers include:

  • Whether the taxpayer exercised ordinary business care and prudence but still failed to comply.
  • Inability to obtain records (for example, due to fire, flood, or a cyberattack).
  • Death, serious illness, or unavoidable absence of the taxpayer or immediate family member.
  • Reliance on erroneous written advice from the IRS (limited situations).
  • Reliance on a tax professional — only when the reliance was reasonable and documented.
  • Other unforeseen events (natural disasters, identity theft, etc.).

These criteria are summarized in IRS penalty relief guidance (see https://www.irs.gov/penalties/penalty-relief).

Real examples that can qualify

  • Natural disaster: Your office and records were destroyed in a hurricane, preventing timely filing. (Document with FEMA reports, insurance claims, or local emergency declarations.)
  • Severe illness or death: A prolonged hospitalization left you unable to manage filings. Provide medical records or hospital statements.
  • Reasonable reliance on a tax professional: If you hired a licensed preparer who missed a filing despite reasonable instructions and oversight, gather engagement letters, emails, and drafts.

In my practice I’ve seen both quick wins (clear medical emergencies with supporting hospital records) and tougher wins (reliance on a preparer where the taxpayer can prove they provided accurate, timely information).

What evidence matters — quick checklist

  • Chronology: clear timeline showing when the event occurred and how it led to missed obligations.
  • Third‑party records: medical notes, police reports, FEMA or disaster declarations, court records, cyber incident reports, or employer letters.
  • Proof of effort: copies of attempted filings, communications with tax professionals, or receipts for recovery actions.
  • Financial documents if financial inability is claimed (bank statements, bankruptcy filings).

For a deeper evidence list and sample materials, see our guides: Preparing a Reasonable Cause Penalty Abatement Letter: Evidence That Matters and How to Get a Penalty Abatement for Reasonable Cause: Evidence Checklist.

How to request abatement

  • Respond promptly to the IRS notice that includes the penalty or submit a written request with supporting documents.
  • Explain facts concisely, attach evidence, and describe steps taken to correct the issue.
  • Consider requesting assistance by phone for initial guidance, then follow up in writing. Our step‑by‑step request process is outlined in How to Request Penalty Abatement from the IRS.

Common mistakes to avoid

  • Submitting weak or generic statements without supporting records.
  • Waiting too long — delays reduce credibility and may forfeit certain administrative options.
  • Assuming reliance on a preparer automatically qualifies; you must show reasonable oversight and that the error was not your own.

Timing and outcomes

There is no fixed deadline to ask for reasonable‑cause relief, but you should act as soon as you know about the penalty. The IRS may grant full abatement, partial relief, or deny the request. If denied, you can appeal the decision (see IRS appeal procedures in Publication 556).

Professional tips

  • Build a clear timeline before you write the request letter.
  • Include primary evidence, not just summaries — contemporaneous records are strongest.
  • If the facts are complex, work with a tax professional who can present the case and, if needed, handle appeals.

When reasonable cause is unlikely

  • Forgetfulness, a change of mind, or not knowing the tax law usually do not qualify.
  • Financial hardship alone (without other qualifying events) often fails unless it’s tied to documented events such as bankruptcy.

Further reading & sources

Professional disclaimer: This article is educational and does not provide legal or tax advice tailored to your situation. For personalized guidance, consult a qualified tax professional or attorney.