Quon filed his Federal income tax return on time, but he did not remit the full balance due. Compute the amount of his failure to pay penalty in each of the following cases. The IRS has not yet issued a deficiency notice.
a.Three months late, $5,000 additional tax due.b.Nine months late, $5,000 additional tax due.c.Five years late, $5,000 additional tax due.
What will be an ideal response?
The failure to pay penalty is 0.5% per month of the tax due, with a maximum penalty of 25% of the unpaid tax (= 50 months of penalty charges).??
| a. | $75 penalty (no minimum amount) (0.5% × 3 months × $5,000 tax due). |
| b. | $225 penalty (0.5% × 9 months × $5,000 tax due). |
| c. | $1,250 penalty (0.5% × 50 months maximum × $5,000 tax due). |
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