Reasonable cause penalty relief: when the IRS will remove penalties

The IRS lists examples of circumstances that may qualify:

• Fire, casualty, natural disaster or other disturbance
• Inability to obtain records despite reasonable efforts
• Death, serious illness, incapacitation or unavoidable absence of you or an immediate family member
• Other reasons that show you used ordinary business care and prudence but couldn't comply

Not usually enough on their own: forgetting, lack of funds (unless caused by circumstances beyond your control), relying on someone else to file, or not knowing the rules. Mistakes by a tax professional are evaluated case by case.

Reasonable cause can apply to many penalties, including failure to file, failure to pay, failure to deposit, and in some cases accuracy-related penalties. It can cover multiple tax years — unlike first-time abatement, which applies to one. Interest on removed penalties is also removed. Interest on the tax itself generally isn't, except in narrow cases of IRS error or delay.

The IRS considers:

• What happened and when.
• How the event prevented you from filing or paying on time.
• How you handled your other obligations during that period (did you pay other bills?).
• How quickly you complied once the circumstances ended.

The timeline matters. A hospitalization in March explains a missed April 15 deadline; it won't explain filing three years later unless the condition continued. Read the IRS's own guidance on penalty relief for reasonable cause.

Documents that match your timeline: hospital or doctor records, a death certificate, insurance claims or disaster declarations, letters showing you requested records, or proof of when you resumed compliance. Keep the explanation short and factual. You don't need to share full medical details — dates and the effect on your ability to act are what matter.

1. Call the number on your notice (verify it on IRS.gov). Smaller penalties are sometimes removed on the phone.
2. Write a letter or file Form 843 with your explanation and documents.
3. Respond to the notice if it includes a response section.
4. Appeal a denial through the Collection Appeals Program or the Independent Office of Appeals if you disagree.

If you qualify for both, decide whether to use reasonable cause now and keep first-time abatement for later — tell the IRS your preference.

A strong reasonable cause request tells a clear, documented story. Start with the penalty, tax period and amount. Then explain what happened (for example, a hospitalization), when it happened relative to the filing or payment deadline, how it prevented you from complying despite ordinary business care and prudence, and what you did to comply as soon as the circumstance ended. Attach evidence: hospital or death records, insurance or police reports, or letters showing records were unavailable. Keep the timeline tight — a gap of months between the end of the problem and your compliance weakens the request. Avoid arguments the IRS generally rejects, such as simply lacking money, forgetting, or relying on a preparer for a deadline you knew about. Send it with Form 843 or in response to the notice, and keep copies. If it's denied, you can request Appeals review.

When the IRS announces disaster relief for a federally declared disaster area, it automatically postpones deadlines for affected taxpayers — no reasonable cause request is needed for those periods. Check IRS.gov's disaster relief page for your county and dates. Penalties assessed despite a postponement can usually be removed by calling the IRS.