How to Know If You’re Eligible for an IRS Tax Penalty Abatement | Axiom Tax Resolution Group

What would you do if you knew there was the possibility of getting your tax penalties wiped away? You read that right. You can try to apply for an IRS tax abatement. While it’s not a hundred percent guaranteed that it would work for you, it is still worth trying. 

The IRS has set strict guidelines that every taxpayer needs to meet to be even considered for a tax abatement. Some of the reasons include honest mistakes, undue hardships, serious illness, and more. The IRS will evaluate the situation, and you need to have the necessary documentation prepared so you can back up your claim. 

If you are interested in learning more about the possibility of tax abatement, read on as we share some information with you:

A Quick Look at Reasonable Cause

Tax penalty abatements are not that easy to get accepted as the IRS won’t just discharge them with no justifiable cause. However, there are various “reasonable cause” factors codified by the Internal Revenue Manual that taxpayers can use as a basis to challenge their tax penalty.

Factor #1: Ordinary Business Care and Prudence

Typical business care and prudence are demonstrated by showing that taxpayers have made every effort possible to comply with their obligations, except for circumstances beyond their control. 

Factor #2: Death, Serious Illness, or Unavoidable Absence

A severe illness, medical condition, or death is perhaps one of the best ways to justify a tax penalty abatement. This is applicable to both individual taxpayers or their family members and corporate taxpayers when the one who is solely responsible for the company’s tax compliance obligations is not present.

Factor #3: Ignorance of the Law

This factor is harder to use as a ‘reasonable cause argument. However, ignorance of the law is still very much a factor that could be considered by the IRS when determining the validity of tax penalty abatement. 

In some taxpayers’ instances, their educational background or other reason may have resulted in them not knowing the requirement to file or pay some of their tax obligations. A taxpayer must show that they have demonstrated efforts to be compliant if they want to present an argument that they shouldn’t be penalized because of their ignorance of the law.

Factor #4: Forgetfulness and Mistakes

For many, tax penalty abatement should not be done based on forgetfulness, so if this is the reason you want to give to the IRS, we highly suggest you rethink it. By nature, forgetfulness doesn’t suggest that you exercise care and prudence to stay in compliance with your tax obligations. In fact, the IRS states that reliance on another person to comply with your tax obligations or oversight on your behalf isn’t reason enough to establish “reasonable cause.” 

Factor #5: Inability to Obtain Records

Some tax penalty reductions have been accepted because the taxpayer cannot obtain the necessary documents to comply with their tax obligations, but note that this doesn’t always ensure success.

Factor #6: Undue Hardship

This is another factor that the IRS may consider for tax penalty abatement. Undue hardship is defined by the IRS as “more than an inconvenience to the taxpayer.” The truth is the taxpayer must show evidence of severe financial hardship or personal catastrophe for their tax penalty to get mitigated for this reason.


These are just some situations the IRS might consider for penalty abatement. If your circumstance belongs to any of these, it’s a good idea to consult a tax resolution specialist in your area who can help you determine the proper steps for you.

Axiom Tax Resolution Group offers tax relief solutions in Birmingham, AL. Get in touch with our tax resolution specialists today to learn how we can help you!