USTaxPenaltySaverWhen to Use Reasonable Cause (vs FTA)
First-Time Abatement should always be your first choice because it requires no explanation or documentation beyond a clean 3-year compliance history. However, if you had a penalty in the past 3 years and do not qualify for FTA, Reasonable Cause is your primary alternative.
Reasonable Cause is also your only option for certain penalty types. FTA only covers failure-to-file, failure-to-pay, and failure-to-deposit penalties. If you have an accuracy-related penalty (IRC 6662), international information return penalty, or other penalty types, Reasonable Cause is the appropriate relief mechanism.
In some cases, you may want to use Reasonable Cause even when you qualify for FTA. For example, if you anticipate needing FTA for a future year (perhaps you know you will have a penalty next year too), you might choose to use Reasonable Cause now and save your FTA for later, since FTA is a one-time administrative waiver.
The 4 Factors the IRS Evaluates
Every reasonable cause determination is evaluated using the four-factor test from IRM 20.1.1.3.2. Your letter must address all four factors to succeed.
Factor 1 - What happened and when: Describe the specific event or circumstance. Be precise with dates. Instead of saying you were sick, state the exact diagnosis date, hospitalization dates, and recovery period. The IRS wants a clear timeline that overlaps with the filing or payment deadline you missed.
Factor 2 - How it prevented compliance: Explain the direct causal connection between the event and your inability to file or pay. A broken arm does not prevent you from authorizing someone else to file electronically. But a coma, severe depression requiring hospitalization, or loss of all records in a fire does create a genuine barrier.
Factor 3 - How you handled tax obligations otherwise: Show that you exercised ordinary business care and prudence. Mention your prior compliance history, any partial payments you made, extensions you filed, or other steps you took to minimize the non-compliance.
Factor 4 - What corrective action you took: Explain what you did to comply as soon as the circumstance ended. If you filed and paid within a week of recovery or returning home, say so. The faster you acted after the impediment was removed, the stronger your case.
The 11 IRM Reasonable Cause Categories
The IRS Internal Revenue Manual at IRM 20.1.1.3 identifies 11 categories of reasonable cause. Your letter should fit into one of these categories because IRS employees are trained to evaluate requests against this specific list.
The categories are: (1) Serious illness or medical incapacity of the taxpayer or immediate family member, (2) Death of a family member, (3) Unavoidable absence (military deployment, incarceration), (4) Natural disaster (fire, flood, hurricane, earthquake), (5) Fire, casualty, or other disturbance, (6) Unable to obtain records (records destroyed or held by third party), (7) Reliance on advice of a tax professional, (8) Reliance on incorrect IRS advice, (9) Mental incapacity, (10) Ignorance of the law (limited circumstances), and (11) Other circumstances showing ordinary business care and prudence.
Categories 1, 4, and 7 tend to have the highest success rates because they are the most common and the easiest to document. Category 11 (other circumstances) is a catch-all but requires particularly strong evidence. Our Reasonable Cause calculator generates templates tailored to each category.
How to Structure Your Letter
Your reasonable cause letter should follow this structure: Header with your name, address, SSN (last 4 digits only), tax year, and notice number. A clear opening statement identifying the penalty and requesting abatement. The body addressing all four factors. A closing requesting specific relief and listing attached documentation.
Opening paragraph (2-3 sentences): State your name, the tax year, the type and amount of the penalty, and that you are requesting abatement based on reasonable cause under IRC 6651(a). Be direct and specific.
Body paragraphs (3-4 paragraphs): Address each of the four factors in order. Use a new paragraph for each factor. Include specific dates, amounts, and references to attached documentation. Keep the tone professional and factual.
Closing paragraph: Summarize your request, list the documents you are attaching as exhibits, and provide your contact information. Include a statement that you are willing to provide additional information if needed.
What to Include as Supporting Documents
Documentation is the difference between approval and denial. For each category: Medical illness requires a letter from your physician stating the diagnosis, dates of treatment, and specifically how the condition prevented you from managing your tax affairs. A prescription or billing statement alone is not enough.
Death in the family requires a death certificate and documentation of your relationship and caretaking responsibilities. Natural disaster requires the FEMA declaration number for your area and documentation of damages. Professional reliance requires the engagement letter, written advice received, and proof that you relied on it in good faith.
Organize your documents as numbered exhibits with a cover sheet. Example: Exhibit A - Physician letter dated MM/DD/YYYY, Exhibit B - Hospital discharge summary, Exhibit C - Prior 3 years of timely filed returns. Our tool generates this exhibit list and transmittal letter automatically.
What NOT to Say in Your Letter
Certain phrases will almost guarantee denial. Never say: I forgot to file or pay. I was too busy. I did not know I had to file. I did not have the money. I did not receive the notice. These are not recognized as reasonable cause by the IRS.
Do not be emotional, confrontational, or vague. Statements like the IRS is unfair, everyone makes mistakes, or I had personal problems without specifics will not succeed. IRS employees follow the IRM guidelines, and emotional appeals are not part of the evaluation criteria.
Do not overexplain or include irrelevant information. A 10-page letter does not get more attention than a well-organized 2-page letter. In fact, overly long letters often suggest the taxpayer does not have a clear, strong case. Be concise, factual, and organized.
Sample Opening Paragraphs by Category
Medical: I am writing to request abatement of the [penalty type] penalty of $[amount] assessed for tax year [year]. I was diagnosed with [condition] on [date] and was under active treatment from [start date] through [end date], which prevented me from [filing/paying] by the deadline. Supporting documentation from my physician is attached as Exhibit A.
Natural Disaster: I am writing to request abatement of the [penalty type] penalty for tax year [year]. My home in [city, state] was severely damaged by [disaster type] on [date], which was covered by FEMA Declaration [number]. My tax records were destroyed, and I was displaced from my home until [date]. Documentation of the disaster damage is attached.
Professional Reliance: I am writing to request abatement of the [penalty type] penalty for tax year [year]. I relied on the advice of my [CPA/enrolled agent/tax attorney], [name], who [specific advice given]. I engaged [name] on [date] and followed their guidance in good faith. The engagement letter and relevant correspondence are attached.
These are starting points only. Our Reasonable Cause calculator generates complete, personalized letters for all 11 categories based on your specific situation, with the four-factor test addressed throughout.