Examples of reasonable cause include personal events, such as illness, death of a family member, and fires, natural disasters or other casualties that destroyed records. Attach a statement to the delinquent return explaining the reasons why it is late and ask IRS to consider a waiver of the penalties. IRS will offer payment arrangements whenever possible. Installment payment procedures were recently streamlined. In other cases the taxpayer can discuss an offer in compromise.
Enforcement remains an option of last resort.
2,000 IRS agents have been reassigned to contact nonfilers who have been identified through IRS records. The agents will prepare returns for those who fail to file. In egregious cases, IRS will recommend criminal prosecution to the Department of Justice. The IRS has never recommended criminal prosecution to the Department of Justice when taxpayers came forward and made a true voluntary disclosure of failing to file returns and filed accurate returns of their own volition. Nonfilers generally only need to be concerned about talking with the IRS about whether penalties can be waived for reasonable cause and making arrangement to pay the delinquent taxes, interest and any penalties which may apply.