Sam Brotman, JD, LLM, MBA December 16, 2013 5 min read

IRS Penalty Abatements and Reasonable Cause


Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law

IRS Penalty Abatements

As noted previously, the purpose of (assessing) a penalty is to encourage voluntary compliance. “Voluntary compliance exists when taxpayers conform to the law without compulsion or threat” (, “ Encouraging Voluntary Compliance,” 8/14/2013). The taxpayer supports the tenets of the Internal Revenue Code in achieving voluntary compliance when he or she makes a good faith effort to meet all tax obligations (“Encouraging Voluntary Compliance”).

Within this context, the taxpayer is deemed compliant when he or she responds to written materials outlining the tax rules and completes all forms relevant to their tax liability. To encourage taxpayer self-compliance, the IRS fairly, consistently, and accurately administers a system of penalties (“Encouraging Voluntary Compliance”). The IRS also educates taxpayers to encourage future compliance.

Reasonable Cause

When a taxpayer provides an explanation to support his or her request for relief, the IRS waives and/or abates the applicable penalty. “If the explanation applies to one (or more) penalty(s) but not all penalties, only the penalty(s) to which the explanation applies should be waived or abated” (“Part 20”). When relief is granted, particularly after the assessment of the penalty, the appropriate portion(s) of the penalty is abated. However, adjustments due to reasonable cause fall under specific guidelines.

Section of the Internal Revenue Manual defines reasonable cause within the context of the taxpayer failing to comply with their tax obligations and the granting of relief because the taxpayer “exercised ordinary business care and prudence in determining their tax obligations” (, “ Reasonable Cause,” 8/14/2013). Reasonable cause relief is usually granted under these circumstances (“Reasonable Cause”). Reasonable cause is defined within penalty sections of the Internal Revenue Code as the evidence required by the taxpayer that he or she “acted in good faith or that the taxpayer[’s] failure to comply with the law was not due to willful neglect” (“Reasonable Cause”). In essence, a taxpayer may have reasonable cause when evidence of their conduct justifies non-assertion or abatement of penalty (“Reasonable Cause”). Cases are judged individually; judgments are based upon presented evidence, facts, and circumstances.

When evaluating the merits of a case, specific criterion is used to determine the taxpayer’s culpability. For example, a specific question that the IRS might use centers on determining what attempt(s) the taxpayer made to comply once all facts and circumstances changed. This question among five others helps the IRS to evaluate the taxpayer’s decision-making abilities to determine if “circumstances prevented the taxpayer from filing a return, paying a tax, and/or otherwise complying with the law” (“Reasonable Cause”).

The Internal Revenue Manual outlines how reasonable cause and other relief provisions are applied within the context of effective tax administration. The provisions must be applied in a “consistent manner and should conform with the considerations specified in the IRC, Treasury Regulations (Treas. Regs.), Policy Statements, and IRM Part 20.1, Penalty Handbook” (“Reasonable Cause”).

It is important to note that reasonable cause relief is not always available for all penalties. For example, a reasonable cause provision may only apply to a specific section of the Internal Revenue Code. In addition, acceptable explanations are not just limited to those outlined within section 20.1 of the Internal Revenue Manual. In essence, penalty relief is typically considered when findings reveal that the taxpayer exercised ordinary business care and prudence even though unable to comply within a prescribed time frame. However, once the facts and circumstances reveal that the taxpayer willfully neglected to comply with his or her tax obligation(s), reasonable cause ceases to exist (“Reasonable Cause”).

Brotman Law request consultation


"Sam is a wonderful, results-oriented and extremely knowledgeable and talented attorney, who really has 'heart' in working on behalf of his clients, and explains options in a straightforward, respectful manner. He has assisted us with great outcomes which have added to our quality of life. I would not hesitate to recommend Sam for his services as he is an ethical, personable and expert attorney in his field. You will likely not be disappointed with Sam's work ethic, approach and his efforts."

-Aileen Dwight, Licensed Clinical Social Worker & Psychotherapist

Last updated: October 6, 2022

Receive the Best of
Brotman Law

Get this topic delivered straight to your inbox.

New call-to-action

Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law



Our best stuff: secrets, tax saving tools, and tax defense strategies from the braintrust at Brotman Law.

  • Expanded benefits during your first consultation with the firm.
  • Priority appointment scheduling and appointment times.
  • Complementary access to our firm’s concierge services.
  • Receive updates and “insider only” tax strategies and tactics.
  • And many more benefits.

Not Sure Where to Start?

Step 1 Start Here

Start Here

These ten big ideas will change the way you think about your taxes and your business.

Start Here

Step 2 Learn About Your Situation

Learn About Your Situation

Find the articles and videos you need to make the right tax decisions in the learning center.

Visit the Learning Center

Step 3 Explore Our Services

Explore Our Services

It is not just about what we do, but who we are, why we do it, and how that benefits you.

View All Services

Step 4 Get Your Game Plan

Get Your Game Plan

Meet with us to outline your strategy. No further obligation, 100% money-back guarantee.

Book an Action Plan