Form 843: How to Claim Reasonable Cause for Penalties
Learn how to request an IRS penalty abatement by demonstrating reasonable cause. This guide covers preparing and submitting a persuasive claim using Form 843.
IRS Form 843, “Claim for Refund and Request for Abatement,” provides a pathway for taxpayers to ask for the removal of certain penalties assessed by the Internal Revenue Service. One of the primary justifications for such a request is the presence of “reasonable cause.” This standard acknowledges that sometimes, despite a taxpayer’s best efforts to comply with their obligations, circumstances beyond their control make it impossible.
Defining Reasonable Cause
The IRS defines reasonable cause by examining if a taxpayer used ordinary business care and prudence but was still unable to meet their tax duties. This is not a blanket excuse for being late or inaccurate, but a recognition of specific life events that can prevent compliance. The IRS evaluates each case individually, looking for a direct link between the event and the failure to file or pay. A history of consistent, on-time filing and payment in previous years can strengthen a claim.
Significant life events are a common basis for a reasonable cause claim. The death or serious illness of the taxpayer or a member of their immediate family is a frequent and valid reason, as such events can disrupt financial management. The IRS will consider the timing and severity of the illness or the proximity of the family member when evaluating the claim.
Events like fires, natural disasters, or civil disturbances that destroy or prevent access to tax records can also establish reasonable cause. For instance, if a flood or hurricane made your documents inaccessible, this is a legitimate reason for a delay. You must demonstrate that the records were unobtainable for reasons beyond your control.
A claim can also be based on receiving erroneous advice from a competent tax professional or the IRS. For this to be valid, you must show that you provided the advisor with all necessary and accurate information and that they were qualified to give tax advice. Simply misunderstanding the law on your own is not sufficient; you must have actively sought and relied upon incorrect professional guidance.
Information and Documents for Your Claim
You must gather your personal details like name, address, and Social Security Number or Employer Identification Number. You will also need to identify the specific tax period, the type of tax form associated with the penalty (e.g., Form 1040), and the exact penalty amount. This information is on the IRS notice you received.
Use Form 843 for this request, and download the most current version from the IRS website. The initial fields, Lines 1 through 6, require the basic data you have gathered, such as the tax period and penalty amount.
The explanation on Line 7 is the most important part of your request. You must write a clear narrative detailing your reasonable cause by creating a timeline of events. Explain step-by-step how the circumstances directly prevented you from filing or paying on time, ensuring the explanation is factual and concise.
You must gather supporting documentation that corroborates your explanation. For a claim based on a serious illness, this could include copies of doctor’s notes or hospital admission records. In the case of a natural disaster, insurance claims or police reports can serve as evidence. If relying on erroneous advice, include a letter from the tax advisor acknowledging the error.
The Filing Process for Form 843
Once you have completed Form 843 and gathered your documents, assemble the package for submission. Attach copies, never originals, of your evidence to the signed form. If filing a joint return, both spouses must sign. The correct mailing address depends on the type of tax and is specified in the Form 843 instructions; for many penalties, the form is sent to the service center where you file your current tax return.
After mailing your claim, the IRS review process can take several months. The agency will evaluate your explanation and documents before issuing a written decision.
The IRS may accept your claim and abate the penalty, sending a notice confirming the adjustment. The agency might also request additional information if your submission was unclear. If your request is denied, the IRS will send a notice explaining the reasons for the decision and providing information on your right to appeal the outcome.