Not knowing is rarely enough. Showing you tried usually is

Figures relate to tax year 2025-26 (UK) · 2025 (US)

A notice arrives with a penalty attached. The amount looks fixed, the letter reads as final, and most people simply pay it.

The IRS removes many of those penalties. A general relief provision covers anyone who exercised ordinary care and still failed to comply. Far fewer people use it than should.

Reasonable cause is the standard, and it turns on behaviour rather than outcome. The question is not whether you got it right, but whether a sensible person in your position would have done the same.

Key takeaways

• Penalties can be removed where you exercised ordinary care and prudence.
• Ignorance alone rarely succeeds, but ignorance plus effort often does.
• First time abatement is a separate and simpler route.
• Interest is generally not removed even where a penalty is.
• Reliance on a professional can support a request.
• The request can be made by letter after the penalty is assessed.
• Documentation matters more than the wording of the argument.

What is reasonable cause?

Reasonable cause asks whether you exercised ordinary business care and prudence and still could not comply. According to IRS guidance, the test looks at all the facts and circumstances rather than at any single factor.

It is deliberately flexible. No list of qualifying excuses exists, because the question is about your conduct rather than about fitting a category.

The flip side is that nothing comes guaranteed. Two people with similar stories can get different answers depending on what they can show.

What kinds of facts qualify?

Serious illness, a death in the family, destroyed records, and an inability to get information despite real effort all feature regularly. So does acting on bad professional advice, which reasonable cause covers squarely.

The common thread is something outside your control combined with evidence you tried. Neither element works alone.

Forgetting, being busy and finding the rules confusing are not enough on their own. They describe most taxpayers.

A worked example

The figures below are illustrative. They use round numbers so you can follow each step and substitute your own.

Peter lives in Leeds and files American returns every year through an accountant. In 2024 his accountant retired mid-season and the replacement filed six weeks late.

The late filing penalty on his $4,000 liability comes to roughly $800. He had provided every document on time and chased the new firm twice in writing.

He requests relief, attaching the emails showing when he sent the papers and when he chased. That correspondence is the whole case.

The IRS drops the penalty. The interest on the late payment is not, because interest is compensation for the use of money rather than a sanction.

What is first time abatement?

A separate waiver for anyone with a clean compliance history. It asks for no explanation and no story at all, which makes it faster and far simpler than arguing reasonable cause from a standing start.

The conditions are mechanical. You must have filed everything due, have no penalties in the three preceding years, and have paid or arranged to pay what you owe.

It is usually worth asking for this first, because it requires no narrative and no evidence.

The two routes compared

The table sets out what each requires. One runs on a checklist. The other you have to argue.

Does not knowing the rules count?

On its own, rarely. Everybody is assumed to know the law, so a bare plea of ignorance fails. Reasonable cause asks what you actually did about it, which is a different question entirely.

Ignorance combined with effort is different. Somebody who asked an adviser, received wrong information and acted on it has a genuine argument.

The line falls between not knowing and not trying. Only the second is fatal.

Can you rely on your accountant?

Sometimes, and the boundary matters a great deal. Acting on bad advice about a point of law usually supports reasonable cause, because you cannot be expected to know more than the person you paid.

Relying on somebody to meet a deadline generally does not. Filing on time stays your own duty, and you cannot hand it to anybody else.

That distinction surprises people. Bad advice may excuse you; a missed deadline usually will not.

Does it remove interest too?

Almost never. Interest pays the government for money it did not hold on time, so it counts as a charge rather than a punishment. Reasonable cause removes penalties, not interest.

Relief reaches only those cases where the IRS itself caused an unreasonable delay. Those cases are narrow and uncommon.

Budget for the interest even where you expect the penalty to go.

How does it differ from streamlined filing?

Streamlined is a programme with defined terms, covering several years at once and requiring a certification about your state of mind. This is a request about a specific penalty already assessed.

They are not alternatives so much as different stages. One brings you into compliance; the other deals with a charge afterwards.

Our guide to streamlined filing covers the catch-up route.

Which penalties can be removed?

Most common ones, including failure to file, failure to pay and accuracy related charges. You can also challenge information return penalties on foreign accounts and foreign gifts using the same standard.

For 2025 the failure to file penalty runs at 5% of the unpaid tax per month to a 25% cap, which makes it the one most worth attacking.

Some penalties have their own statutory relief tests rather than using this general standard.

When should you ask?

Once the IRS has charged the penalty, not before, because nothing exists to abate until then. The notice itself names the charge, which gives you exactly what the request needs to reference.

There is no strict deadline, though a refund claim for a penalty already paid has its own time limit. Asking promptly is simply easier.

Do not pay first and assume that ends it. The IRS still refunds a paid penalty on a successful request.

What should the request contain?

A clear account of what happened, the dates involved, what you did about it, and documents proving each point. The narrative explains your reasonable cause, and the attachments are what actually persuade anybody.

Keep it factual rather than emotional. A letter describing frustration adds nothing, while one listing dates and attaching evidence does the work.

Address the obvious counter-argument directly instead of hoping nobody raises it.

What if the request is refused?

You appeal to an independent office inside the IRS, which reviews the decision afresh rather than rubber stamping it. That route succeeds more often than people expect, and it costs nothing to use.

The appeal has a deadline stated in the refusal letter, usually thirty days. Missing it narrows your options considerably.

Our guide to IRS letters after a streamlined filing covers how these exchanges run.

Does living abroad help the argument?

Modestly, in the right circumstances. Trouble obtaining American forms, postal delays and the clash between the two tax years all count as genuine obstacles capable of supporting reasonable cause on their own facts.

They are not a general excuse. Millions of Americans abroad file on time, so distance alone establishes nothing.

Specific obstacles you can evidence carry weight. Generalised difficulty does not.

What evidence actually persuades?

Dated correspondence, above everything else. Emails to an adviser, letters from a bank, medical records and proof of when you asked for documents all pin the timeline down in a way assertions never do.

Evidence created at the time beats anything written afterwards. A contemporaneous email carries far more weight than a recollection.

Keep a file as events unfold rather than assembling one when the penalty arrives.

Does a bank or software failure count?

It can, where you acted promptly once it emerged. A payment that failed at the bank, or filing software that rejected a return on the deadline, both describe something outside your control.

The reasonable cause argument lives in what you did next. Somebody who noticed and fixed it within days looks very different from somebody who noticed and waited.

Screenshot the failure at the time. It is almost impossible to evidence later.

What if the penalty relates to a foreign account?

The same general standard applies, and these charges are well worth challenging because the sums involved are large. A non-wilful failure can run to around $10,000 per account for every year you missed.

Relief here turns heavily on what you knew about the obligation. Somebody who genuinely never heard of it has a stronger case than somebody who filed returns ignoring the question.

Our guide to delinquent FBAR submissions covers the dedicated route.

Can you ask for both routes at once?

You can present them in order, which is usually the sensible approach. Ask for first time abatement, and set out your reasonable cause argument as the fallback if the clean history test fails.

Doing it in one letter saves a round of correspondence. It also means nothing gets lost if the first route turns out to be unavailable.

Make clear which argument you are leading with.

Does the size of the penalty matter?

Not to the standard, though it changes how much scrutiny the request attracts. A small charge is often removed on a short letter, while a large one invites a closer look at the evidence.

The effort is worth calibrating accordingly. A thin request on a substantial penalty wastes the opportunity.

Put the work in proportion to what is at stake.

How long does a decision take?

Several months is normal, and considerably longer where the request goes on to appeal. Penalties and interest both keep running while it sits in the queue, which regularly catches people out.

Paying the amount and claiming it back afterwards stops the interest growing. It costs cash flow and saves money overall.

Decide which matters more to you before choosing.

Does it affect your record for next time?

A removed penalty generally restores the clean history that first time abatement depends on, which matters a great deal if you find yourself needing relief again within the following three years.

Reasonable cause relief does not use up anything. You can rely on it more than once, provided the facts genuinely support it each time.

That makes the argued route more durable than the automatic one.

How to request relief

1. Read the notice and identify exactly which penalty was charged.
2. Check whether first time abatement is available to you.
3. Build a dated timeline of what happened and when.
4. Gather the documents that evidence each step.
5. Write a factual account referring to those documents.
6. Address the obvious counter-argument in the letter.
7. Send the request and keep proof of posting.
8. Appeal within thirty days if it is refused.

Mistakes and penalties we see with reasonable cause requests

The first is paying the penalty and assuming that closes it. A successful request still recovers a penalty you already paid.

The second is arguing ignorance alone. The standard asks what you did, not merely what you failed to understand.

The third is blaming an accountant for a missed deadline. Timely filing stays your own duty, and nobody can take it off you.

The fourth is writing a long letter with no attachments. The documents do the persuading, not the prose.

How US UK Tax Accountants helps

We work out which route fits before writing anything. First time abatement needs no argument, and it is available more often than people realise. Where it is not, we build the request around documents rather than assertions.

Where a penalty followed a catch-up filing, we deal with both together. Our streamlined filing service covers the underlying submission.

If a notice has arrived with a penalty on it, get in touch before paying it. The charge is more negotiable than the letter suggests.

Last reviewed 13 October 2026. This article is general information and not personal tax advice. Every case turns on its own facts, so take advice on yours before responding.