IRS penalty abatement for reasonable cause removes late-filing, late-payment and certain other penalties when you can show you used ordinary business care and prudence but something outside your control prevented compliance. It is separate from first-time abatement, an administrative waiver based on a clean record. Knowing which to ask for, and how to prove it, decides most requests.
If penalties make up a large part of what you owe, call (415) 754-0115 for a free consultation, or reach us on our contact page. An attorney can review the notices and your history before you make a request.
Two routes to relief
People often lump these together, but the IRS treats them very differently.
First-time abatement
First-time abatement is an administrative policy. It generally applies to failure-to-file, failure-to-pay and failure-to-deposit penalties when you had no significant penalties in the prior three years, have filed all currently required returns or valid extensions, and have paid or arranged to pay the tax. You do not need to explain why you were late.
Reasonable cause
Reasonable cause looks at facts and circumstances. You must show that you exercised ordinary business care and prudence and still could not comply. It can apply to more penalty types and to more than one year, but it demands evidence.
Which one to ask for first
First-time abatement generally applies only to the earliest tax period in a run of penalties, and once used it shapes eligibility for the next few years. Reasonable cause can reach later periods and other penalty types but needs proof. Which request to make, and in what order, depends on your history and the penalties involved, and an attorney can review both before anything is filed.
What counts as reasonable cause
The IRS Internal Revenue Manual lists circumstances that commonly support relief. Each still needs to connect to the specific deadline you missed.
- Serious illness or incapacity of you or an immediate family member
- A death in the immediate family
- Fire, flood, casualty or natural disaster
- Inability to obtain records despite reasonable efforts
- Reliance on erroneous written advice from the IRS
- In some cases, reliance on a qualified tax professional's advice on a substantive tax question
What usually does not qualify
Forgetting, being too busy, not understanding the law and simply lacking money are rarely enough on their own. Relying on someone else to file for you generally does not excuse a late filing; the Supreme Court held in United States v. Boyle that meeting the filing deadline is the taxpayer's own responsibility. Lack of funds can matter for failure-to-pay penalties if you show you took reasonable steps and still could not pay.
Building an IRS penalty abatement reasonable cause request
A persuasive request tells a clear, dated story and backs it up.
- Identify the penalties. List each tax period, form and penalty type from the notices or account transcripts.
- Explain the timeline. What happened, when it started, when it ended and how it prevented compliance.
- Show what you did once able. The IRS expects you to comply promptly after the circumstances ease.
- Attach documentation. Hospital records, death certificates, insurance claims, disaster declarations or letters showing record requests.
Requests can be made by phone, in response to a notice, by letter, or on Form 843, Claim for Refund and Request for Abatement. Written requests create a better record if the matter goes to appeal.
Common mistakes that sink requests
Vague explanations, missing dates and circumstances that ended months before the deadline are the usual reasons requests fail. So is a story that does not match the records, such as claiming a long illness while other returns or business filings were made on time during the same period. The IRS reads the whole account history, so the explanation has to fit it.
Interest follows the penalty
Interest on the underlying tax generally cannot be abated for reasonable cause, but interest charged on a penalty goes away when that penalty is removed.
Appealing a denial
If the IRS denies your request, the denial letter usually explains your appeal rights. You can typically ask the IRS Independent Office of Appeals to review the decision, often with Form 12203 or a written protest depending on the amount. Appeals officers take a fresh look and weigh the hazards of litigation, so a denial at the service center level is not the end of the road.
If you already paid the penalties, a refund claim may be the route, and if that claim is disallowed, a refund suit may be possible within the time limits. Penalties raised during an examination can also be contested as part of the audit appeal; our article on IRS audit help in California covers that process.
Working with a Pleasanton tax attorney
The Somal Law Firm, led by attorney Bob Somal, handles IRS disputes and appeals as part of its tax law practice, serving clients across Pleasanton, the Tri-Valley and the East Bay. Penalty relief is often one piece of a larger plan that also involves payment arrangements or other debts. You can read more about choosing representation in our guide to finding a tax attorney in the Bay Area.
Frequently asked questions
Can I request abatement after paying the penalty?
Yes. A refund claim can be filed within the applicable time limits, generally measured from when the return was filed or the tax was paid.
Does California offer similar relief?
The Franchise Tax Board has its own reasonable cause standard and, for individual tax years beginning in 2022 or later, a one-time abatement for taxpayers with a clean recent history. The rules are similar but not identical to the IRS's.
Can a business request reasonable cause relief?
Yes. Businesses often seek relief from failure-to-deposit penalties on payroll taxes. The same standard applies, though the IRS will look at who was responsible for deposits and whether others could have stepped in.
How long does a decision take?
Phone requests for first-time abatement can sometimes be approved on the call. Written reasonable cause requests often take longer, and appeals add more time.
If penalties are driving your balance, call (415) 754-0115 to schedule a free consultation with the Somal Law Firm, or use our contact page as a backup. We will review the penalties, the facts behind them and the request most likely to be heard.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.