If you’ve incurred IRS penalties, it may be possible to eliminate those penalties through penalty abatement. The key to doing so is showing reasonable cause or ensuring you qualify for first-time abatement. As of 2026, if you qualify for first-time abatement, the IRS will automatically waive the penalties, but you must contact the IRS to request reasonable cause abatement.
To point you in the right direction, we’ll discuss what reasonable cause is, when it applies to penalty abatement, and how you can qualify for it. To get help now, contact us at Wiggam Law today.
Understanding Tax Penalty Abatement
The IRS removes some failure-to-pay, failure-to-deposit, and failure-to-file penalties automatically, but only if you meet very strict criteria. Otherwise, you must contact the agency and apply for abatement by building a persuasive story about why you filed, paid, or deposited taxes late. It’s critical to understand the tax code and what the IRS wants to hear when asking for penalty relief.
Because this can be a complicated process, and there is so much on the line, it is often best to work with a tax professional, such as a tax attorney, to request tax penalty abatement when possible. In all situations, do not rush into this request without knowing what the process entails and how to show the IRS you have reasonable cause for missing that deadline.
A Reasonable Cause Definition
The IRS defines reasonable cause within the context of a taxpayer failing to comply with their tax obligations as the taxpayer having “exercised ordinary business care and prudence in determining their tax obligations.” So, what does that mean?
To qualify for tax penalty relief, you must provide proof that you were unable to comply due to some type of circumstance beyond your control. Reasonable cause for penalty abatement must be based on authentic facts and circumstances you were facing at the time of making the payment. The IRS will consider virtually any reason you present if it shows you tried to comply but failed to do so, but only certain reasons get approved.
Some examples of reasonable cause for penalty abatement that may apply include:
- Inability to obtain the needed records to complete the obligation
- Extreme hardship
- A serious medical condition
- Unavoidable absence of the taxpayer
- A mistake despite ordinary business care and prudence
- A fire or casualty, such as a natural disaster
- A close death
- Incorrect advice from tax professionals
Typically, you have to back your claim with proof. For example, if you were suffering a serious medical situation at the time, you likely have documentation of it from medical bills. This can become tricky as proving some situations is more challenging than others.
Other Options: First-Time Abatement
If you qualify for first-time abatement, the IRS will automatically waive your penalties as of the 2026 filing season (applies to tax years 2025 and beyond). However, for tax years prior to that, you still need to reach out to the IRS.
To qualify for FTA, you will need to meet the following requirements:
- Have had no failure to file or failure to pay penalties in the last three years to the IRS.
- Have filed all of your tax returns or filed an extension of time to file
- Pay or make arrangements to pay any tax debt you owe.
Although you don’t have to apply for FTA, keep in mind that the IRS may only abate penalties that you’ve incurred up to the date of the waiver. If you haven’t paid the tax in full, that means you may still be incurring failure-to-pay penalties, and once you’ve paid off the tax debt, you may need to contact the agency to make sure the additional penalties get abated.
How to Meet the IRS’ Reasonable Cause Requirements
To communicate your reasonable cause for penalty abatement, you must file Form 843 or write a letter to the agency. You must demonstrate how other situations in your life created a situation where you could not meet your tax obligation as expected.
Whether you use the penalty abatement form or write a letter, you must include the following:
- Your name and identification information, including your taxpayer identification number, tax form, and tax period.
- A statement of what your request is, referencing IRM 20.1.1.3.6.1, the tax law that allows you to request an abatement
- If applicable, a list of factors that you meet the FTA requirements – i.e., you were compliant with filings, three years of no penalties, and compliant with all payments.
Or, if you are seeking a penalty waiver for reasonable cause, you will need to document the reason for your failure to file or pay. Then, submit some type of proof to demonstrate what occurred.
Writing Tips for Abatement of Penalties for Reasonable Cause
Keep the following tips in mind when writing your letter:
- Be specific and to the point. The IRS deals with millions of taxpayers. Write a short note that’s to the point.
- Don’t disclose personal medical history. Although you should have some substantial proof that shows that you suffered a medical or mental health concern that limited your ability to take action, you don’t need to disclose anything too personal.
- Be honest. There is no benefit in not providing accurate information. The IRS is likely to investigate to clarify the details, and the request is signed under penalty of perjury.
It is also quite important to realize the financial impact this process can have. Since maximum tax penalties can reach as much as 25% of the tax you owe (or 50% if you’re dealing with both late filing and late payment penalties) plus interest, you can save a lot by requesting an abatement.
Take the time to document the circumstances you were facing that put you in the position not to make payment as expected.
Reasonable Cause for Late Filing Process
When you have prepared your statement of reasonable cause that outlines your situation, then complete the following before you send it:
- File all unfiled returns. Make sure all of your tax returns are filed and accepted by the IRS before making an abatement request.
- Pay your taxes or set up a payment plan. This will minimize any additional taxes owed. It also demonstrates that you are taking actions to get caught up.
- Create a plan for eliminating this risk from occurring in the future. That could include ensuring you file on time and working with a tax attorney to guide you.
Once you take these steps, you will need to print the letter and mail it to the service center, where you would be required to file your current year’s tax return for the tax that you are requesting abatement from. You can use the same address and instructions on your tax return.
Penalty Abatement FAQs
Which penalties can qualify for reasonable cause?
You may be able to get reasonable cause relief on failure-to-file, failure-to-pay, failure-to-deposit, information return penalties, and accuracy-related penalties.
What is an example of reasonable cause for late filing?
An example of a reason for a penalty waiver for filing your taxes late could include:
- A natural disaster
- Lost documentation and inability to get records
- Family medical emergency
- Fire
- Civil disturbance
Be honest with the IRS about what occurred in your situation. Remember, you will need to back up these statements with some type of proof.
What are the components of a reasonable cause for penalty relief?
IRS penalty abatement under reasonable cause has two components.
- You acted with ordinary business care and prudence.
- Circumstances that were beyond your control made it so that you could not comply with expected obligations.
The IRS will want to know the reason why you did not file or pay that was outside of your control to show it was not due to willful neglect. Additionally, the IRS wants to know if you made an honest and reasonable attempt to file an accurate return as soon as it was possible.
What if I cannot pay the taxes I owe to the IRS?
If you can’t pay your taxes, consider the following options:
- Setting up a payment plan to make monthly installments of what you owe over a period of time
- Applying for an Offer in Compromise so you can settle for less than you owe.
- Requesting Currently Not Collectible Status, which shows the IRS you do not have the means to pay any tax right now, so they pause collection actions against you.
Get the Help You Need with IRS Tax Penalty Abatement
IRS tax penalties are costly, and the process of requesting abatement can be frustrating. Our team can help. Set up a consultation with our tax attorneys now for guidance. Turn to Wiggam Law for tax abatement help. You can reach us online or call us at (404) 233-9800.
