Maria did not pay her Federal income tax on time. When she eventually filed the return, she reported a balance due. Compute Maria’s failure to file penalty in each of the following cases. Disregard any failure to pay penalty.
a.Three months late, $500 additional tax due.b.Four months late, $2,000 additional tax due.c.Ten months late, $10,000 additional tax due.d.Four months late due to fraud by Maria, $10,000 additional tax due.e.Fifteen months late due to fraud by Maria, $10,000 additional tax due.
What will be an ideal response?
The failure to file penalty is 5% per month of the tax due with a $215 minimum penalty and a maximum penalty of 25%. In the case of fraud, the penalty rate is tripled.??
| a. | $75 (5% × 3 months × $500 tax due), but apply the larger $215 minimum penalty. |
| b. | $400 penalty (5% × 4 months × $2,000 tax due) . |
| c. | $2,500 penalty (5% × 5 months maximum × $10,000 tax due). |
| d. | $6,000 penalty (15% × 4 months × $10,000 tax due). |
| e. | $22,500 (15%×15 months×$10,000 tax due), but limited to $7,500 (75% of the tax due). |
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