Glossary Definition: Reasonable Cause (300 words)
Reasonable Cause is a legal standard used by the IRS to determine whether a taxpayer should be excused from penalties for failing to file tax returns on time, pay taxes when due, or accurately report tax information. When a taxpayer demonstrates they exercised ordinary business care and prudence but still failed to comply with tax obligations due to circumstances beyond their control, the IRS may grant penalty relief based on reasonable cause.
Establishing reasonable cause requires showing that you took reasonable steps to comply with tax obligations but were prevented by circumstances beyond your control. Common situations that may constitute reasonable cause include serious illness, injury, or death of the taxpayer or immediate family member preventing timely compliance; natural disasters, fires, or civil disturbances destroying records or preventing filing; inability to obtain necessary records despite reasonable efforts; incorrect written advice from IRS personnel; unavoidable absence preventing filing or payment; and reliance on erroneous advice from a qualified tax professional, provided you supplied complete and accurate information.
Reasonable cause does not include ignorance of the law (unless reasonable and in good faith), simple forgetfulness, claiming you didn’t receive IRS notices, lack of funds to pay taxes (though financial hardship may support other relief options), or mistakes by tax preparers when you failed to provide accurate information. The IRS evaluates reasonable cause based on all facts and circumstances, considering the nature of the tax obligation and what a reasonable, prudent person would have done under similar circumstances.
To request penalty relief based on reasonable cause, submit a written statement explaining your situation, including dates, facts, and circumstances preventing compliance, along with supporting documentation such as medical records, death certificates, insurance claims, police reports, or other evidence. You can request relief when responding to penalty notices, filing Form 843 (Claim for Refund and Request for Abatement), or calling the IRS number on your notice.
The IRS also offers first-time penalty abatement (FTA) for taxpayers with clean compliance history, which requires less documentation than reasonable cause relief. First-time abatement provides administrative relief without requiring detailed reasonable cause explanations for eligible taxpayers with no prior penalties in the previous three years.
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