When and How to Ask for Penalty Abatement After a Disaster

When should you request IRS penalty abatement after a disaster?

When a natural disaster, fire, flood, hurricane, or other emergency disrupts your ability to file returns, pay taxes, or meet payroll deadlines, you may qualify to have IRS penalties removed. The IRS issues automatic relief for many federally declared disasters, and it also accepts individualized penalty-abatement requests (commonly via Form 843 or a written statement) when taxpayers can show reasonable cause. (See IRS guidance on penalty abatement and disaster relief for taxpayers.)

This article explains when to ask, how to prepare your case, what evidence matters, practical examples from my practice, and next steps if the IRS denies relief.

Why timing matters

• Ask as soon as you can. If the IRS publishes an automatic relief notice for a disaster, deadlines may be extended retroactively. If not, filing an abatement request quickly gives the IRS context while your records and memories are fresh.
• Some relief is automatic for taxpayers in covered locations; other relief requires an individual request and supporting documentation.
• Statute of limitations still applies to refund claims and some abatements: generally three years from the filing date or two years from the date you paid the tax — so don’t wait years to act if penalties were assessed and you think relief applies.

(Reference: IRS penalty abatement overview and disaster-relief announcements.)

Who can qualify

• Individuals and businesses physically located in areas listed in a federal or state disaster declaration may receive automatic relief announced by the IRS.
• Taxpayers outside declared zones may still qualify if the disaster caused direct, documentable disruption (evacuation, loss of records, business closure).
• Employers who missed payroll deposits because of disaster-related business interruption may qualify for deposit penalty relief.

In my 15 years advising clients, I’ve seen successful abatement for homeowners displaced by floods, small-business payroll deposit failures during mandated evacuations, and taxpayers who couldn’t access tax records after wildfires.

Which penalties are eligible

Common penalties that the IRS may abate after a disaster include:

• Failure-to-file penalty
• Failure-to-pay penalty
• Estimated tax penalties
• Failure-to-deposit (payroll) penalty

Note: Interest generally continues to accrue on unpaid tax even when penalties are abated unless the IRS announcement or law specifies otherwise. Always confirm whether interest is covered in any relief notice.

How to request penalty abatement after a disaster (step-by-step)

1. Review IRS disaster announcements first

   Check IRS news releases and their disaster-relief pages. If the IRS has announced automatic relief for your location and tax period, follow those instructions — you may not need a Form 843 request. (See IRS disaster-related relief announcements.)

2. Gather evidence

   Essential supporting items:

• Official disaster declaration or news release covering your area (FEMA, state emergency declarations, or an IRS relief notice)

• Proof of physical damage (photos, insurance claims, contractor estimates)

• Evacuation orders, shelter records, or hotel receipts if you were displaced

• Records showing business interruption (invoices, payroll reports, emails, bank statements)

• Correspondence with insurers or contractors

  Incomplete or vague documentation is the most common reason for denial. Keep originals and create a clear timeline of events.

1. Decide the correct request path

• Automatic relief: follow IRS instructions in the announcement — usually no action needed beyond keeping records.

• Individual abatement: complete IRS Form 843 (Claim for Refund and Request for Abatement) and attach supporting documents, OR write a clear, signed letter explaining events and attach evidence.

• Reasonable cause: if the disaster wasn’t federally declared but still prevented compliance, submit a reasonable-cause statement with documentation. Explain what happened, why it prevented compliance, and the steps you took to comply once able.

  (Form 843 is still the standard form for many abatement requests; verify current form instructions on IRS.gov.)

1. Complete the paperwork with clarity

• Identify the tax type, period, and exact penalties you want abated.

• Provide a concise timeline of the disaster’s impact.

• Attach corroborating documents and mark them clearly.

• Include your contact information and a copy of the notice or penalty assessment you received.

  Example opening sentence for a written request: “Because of [disaster name] declared on [date], I was evacuated from my home/business and could not file/pay by the due date. I request abatement of the penalties assessed for [tax period].” Keep your narrative factual and chronological.

1. Submit to the right IRS office

• Mail Form 843 or your letter to the address shown on the penalty notice or to the IRS office that handles abatements (follow Form 843 instructions). If the IRS issued specific disaster filing instructions, use those.
• Keep certified-mail proof or maintain electronic proof of submission when available.

1. Follow up and document communications

• Expect weeks to a few months for routine reviews; large disasters can lengthen processing times.
• Keep notes of any calls (date, agent name, summary).
• If denied, you can request a reconsideration or appeal — the IRS will provide appeal rights in the denial letter.

Practical examples from practice

• Small business: After Hurricane Laura, a payroll client missed deposit deadlines while payroll staff were evacuated. We submitted Form 843 with evacuation orders, internal payroll logs, and a contractor letter. The IRS abated the majority of failure-to-deposit penalties; interest remained on unpaid tax.

• Homeowner: A wildfire forced a family from their property the week of the tax deadline. With FEMA disaster declaration, insurance claim documentation, and a signed statement, the family’s failure-to-file penalty was removed after filing the late return and submitting a Form 843.

These examples show the importance of a clear timeline and corroborating documents.

Common mistakes to avoid

• Waiting too long to request abatement: delayed requests make evidence less persuasive.
• Submitting vague statements without corroboration: attach specific documents (evacuation orders, photos, insurance claims).
• Assuming interest will be forgiven: unless relief explicitly covers interest, expect it to remain.
• Using incorrect mailing addresses: follow the Form 843 instructions or the IRS disaster notice directions.

What to expect after you file the request

• Acknowledgment: The IRS may send an acknowledgment or simply process the case.
• Processing time: Varies — weeks to months depending on caseload and disaster severity.
• Possible outcomes: full abatement, partial abatement, or denial. If denied, the IRS will explain appeal rights.

If the IRS denies your request and you believe the decision is wrong, appeal options include requesting an IRS Appeals review or filing a timely claim in U.S. Tax Court, depending on the issue.

When to hire a professional

Engage a tax professional if:

• Penalties are large or involve payroll/deposit issues that carry trust fund recovery implications.
• The facts are complex (multiple tax periods, business interruption across states).
• You need help assembling evidence or drafting a persuasive reasonable-cause statement.

In my practice, professional preparation of Form 843 and a well-documented packet speeds review and improves approval odds.

Useful links and additional reading

• IRS penalty abatement overview: https://www.irs.gov/faq/interest-penalties/penalty-abatement
• IRS disaster-related relief announcements and newsroom: https://www.irs.gov/newsroom/irs-statement-on-disaster-related-relief-available-to-victims-of-natural-disasters

FinHelp internal resources:

• Penalty Abatement for Natural Disasters and Widespread Hardship: https://finhelp.io/glossary/penalty-abatement-for-natural-disasters-and-widespread-hardship/ (detailed checklist and examples)
• How to Request Penalty Abatement: Evidence, Forms, and Timing: https://finhelp.io/glossary/how-to-request-penalty-abatement-evidence-forms-and-timing/ (forms, sample letters)
• The Basics of Penalty Abatement: Reasonable Cause vs Administrative Waivers: https://finhelp.io/glossary/the-basics-of-penalty-abatement-reasonable-cause-vs-administrative-waivers/ (definitions and comparisons)

Professional disclaimer: This article is educational and reflects general practices and IRS guidance as of 2025. It does not substitute for individualized tax advice. Consult a qualified tax professional or the IRS for decisions about your specific situation.

Final note: If you’re facing penalties after a disaster, start building your documentation now, check IRS disaster notices for automatic relief, and prepare a clear, concise abatement request if needed. Acting promptly and methodically improves the chance the IRS will grant relief and frees more resources for recovery efforts.