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Circumstances that may indicate reasonable cause and good faith include an honest misunderstanding of fact or law that is reasonable in light of all of the facts and circumstances, including the experience, knowledge, and education of the taxpayer.
Definition. A standard of proof that is applied to a set of facts or actions to prove whether a reasonable person would have come to the same conclusion or acted in the same way given the totality of the circumstances.
In cases of substantial understatement, the Accuracy-Related Penalty is 20% of the portion of the underpayment of tax that was understated on the return.
The IRS will consider any sound reason for failing to file a tax return, make a deposit, or pay tax when due. Sound reasons, if established, include: Fire, casualty, natural disaster or other disturbances.
Circumstances that may indicate reasonable cause and good faith include an honest misunderstanding of fact or law that is reasonable in light of all of the facts and circumstances, including the experience, knowledge, and education of the taxpayer.

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You may qualify for penalty relief if you demonstrate that you exercised ordinary care and prudence and were nevertheless unable to file your return or pay your taxes on time. Examples of valid reasons for failing to file or pay on time may include: Fires, natural disasters or civil disturbances.
State the type of penalty you want removed. Include an explanation of the events and specific facts and circumstances of your situation, and explain how these events were outside of your control. Attach documents that will prove your case.
Fires, natural disasters or civil disturbances. Inability to get records. Death, serious illness or unavoidable absence of the taxpayer or immediate family. System issues that delayed a timely electronic filing or payment.
Definition. A standard of proof that is applied to a set of facts or actions to prove whether a reasonable person would have come to the same conclusion or acted in the same way given the totality of the circumstances.
Reasonable cause requires the taxpayer to exercise ordinary business care and prudence. If a taxpayer has exercised such ordinary care and prudence, and is nevertheless unable to file the return within the prescribed time, then the delay is due to reasonable cause.

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