The fact pattern: Acme Holdings LLC, an S-corporation, was late filing its 2020 Form 1120-S. The controller responsible for the return was hospitalized for an extended illness from February 2021 through May 2021, covering the original March 15 deadline and the September 15 extended deadline. The return was eventually filed on October 28, 2021. The IRS assessed a failure-to-file penalty of $4,200 plus $640 in interest.
Sample Form 843
Top section
- Name: Acme Holdings LLC
- Address: 1234 Industrial Park Drive, Dallas, TX 75201
- SSN: [blank — entity]
- Spouse SSN: [blank]
- EIN: 12-3456789
- Daytime phone: (214) 555-0142
Line 1 — Tax period
2020 (calendar year)
Line 2 — Amount
$4,840
Line 3 — Tax type
☒ Income
Line 4 — Employment tax filer
[Not applicable]
Line 5 — Type of relief
☒ 5a Interest assessed · ☒ 5b Penalty assessed
Line 6 — IRC section
IRC §6651(a)(1)
Line 7 — Explanation
"See attached Statement of Reasonable Cause."
Signature
Wet signature of the corporate officer with authority to bind the entity (typically CFO or CEO).
The attached reasonable-cause statement is what the IRS examiner actually reads. Form 843 itself is procedural — it tells the IRS "here is a request for $X under IRC §Y." The attachment establishes the facts. See the sample text below.
Sample reasonable-cause statement
Acme Holdings LLC · EIN 12-3456789 · Tax Period 2020 · Attachment to Form 843
Re: Request for abatement of the failure-to-file penalty under IRC §6651(a)(1)
Acme Holdings LLC respectfully requests abatement of the $4,200 failure-to-file penalty (plus $640 in associated interest) assessed against the 2020 Form 1120-S, on the ground of reasonable cause under IRC §6651(a)(1) and Treas. Reg. §301.6651-1(c).
Normal compliance process. Throughout 2018, 2019, and the first half of 2020, the company's controller, Jane Doe, was responsible for all tax compliance. Her process included quarterly close, year-end engagement with our outside accounting firm, and timely filing of Form 1120-S each year by March 15 (or September 15 if extended). Returns for 2017, 2018, and 2019 were filed on time.
The triggering event. On February 8, 2021, Ms. Doe was admitted to Baylor Medical Center with a severe pulmonary embolism. She was hospitalized through May 14, 2021, including 47 days in the intensive care unit. Her medical records and the hospital's discharge summary are attached as Exhibit A.
How the event prevented compliance. Ms. Doe was the sole holder of access credentials for the company's accounting platform and the engagement-letter relationship with our outside CPA firm. The 2020 books were not yet closed at the time of her admission, and her hospitalization made it impossible for her to authorize the close, approve the trial balance, or sign the engagement letter for return preparation. The March 15, 2021 deadline passed during her ICU stay. The September 15, 2021 extended deadline passed during her medically-supervised recovery period, during which she was advised against work activity.
Corrective action. Ms. Doe returned to limited work activity on October 4, 2021. Within three weeks she had closed the 2020 books, signed the CPA engagement letter, and the 2020 Form 1120-S was filed on October 28, 2021 — at the earliest moment after recovery permitted. The company has been compliant on all 2021 and 2022 filings since.
Exhibits. Exhibit A: Hospital admission and discharge records. Exhibit B: Treating physician's letter confirming the duration and severity of incapacity. Exhibit C: Company's 2017–2019 filing history confirming three-year clean compliance.
What the IRS did
In this hypothetical, the IRS would likely grant the abatement based on the documented hospitalization spanning the entire delinquency period and the demonstrated clean compliance history. The penalty and the interest charged on it would be refunded within 60–120 days of the IRS processing the request. If FTA were also available (clean three-year lookback), the practitioner might cite both grounds — the IRS would grant on whichever path is most readily approved.