Reasonable cause is a justification that taxpayers can use to request the abatement of IRS penalties, such as Failure to File or Failure to Pay. The IRS will consider reasonable cause when taxpayers can demonstrate that they made a good-faith effort to comply with tax laws but were unable to do so due to circumstances beyond their control.
Examples of reasonable cause include:
- Illness or injury that prevented timely filing or payment.
- Natural disasters such as hurricanes or floods.
- Death in the family.
- Reliance on incorrect professional advice.
To request penalty abatement based on reasonable cause, taxpayers must submit Form 843 or a written statement explaining the reason for the non-compliance and provide supporting documentation, such as medical records, insurance reports, or legal documents.
The IRS reviews each reasonable cause request on a case-by-case basis, and while approval is not guaranteed, providing thorough documentation and a clear explanation can increase the chances of receiving penalty relief.