How it works
Reasonable cause is the standard for removing most penalties when you show that you exercised ordinary business care and prudence but still could not meet the obligation. Recognized grounds include serious illness, death in the family, natural disaster, unavailable records, and reliance on a qualified professional’s advice. The IRS looks at what happened, when, and what you did once you could comply. Ignorance of the law alone rarely qualifies; reliance on a professional to file on time does not either, under the Boyle rule.
Why it matters
Reasonable cause is the only route for accuracy-related and international information return penalties, which First Time Abate does not cover. The request is a written narrative with documentation, and its quality decides the outcome.
Example
A taxpayer missed Form 3520 for a foreign inheritance because her CPA advised it was not required. A reasonable cause statement documenting the advice, the CPA’s qualifications, and the prompt filing once she learned of the requirement supports removal of the 25 percent penalty.
Related: penalty abatement, accuracy-related penalty.
