Penalty Abatement: Reasonable Cause

The IRS determines reasonable cause for late filing by evaluating whether the taxpayer exercised ordinary business care and prudence but was nevertheless unable to comply with the filing requirement within the prescribed time. The determination is based on all the facts and circumstances of the taxpayer’s situation. The IRS will consider any reason that establishes the taxpayer used all ordinary business care and prudence to meet their filing obligations but was still unable to comply.