Question

In the case of civil fraud, the penalty is _____ of the underpayment attributable to fraud.

a. 125%
b. 150%
c. 50%
d. 75%
e. 100%

Answer 1

The penalty for civil fraud is 75% of the underpayment attributable to fraud, indicating a severe consequence for such violations.

Step-by-step explanation:

In the case of civil fraud, the penalty is a significant portion of the underpayment due to the fraudulent activity. Specifically, according to the Internal Revenue Code (IRC), which governs tax-related matters in the United States, the fraud penalty equals 75% of the portion of the underpayment that is attributable to fraud. This is a steep penalty, reflecting the serious nature of a fraud violation and indicating that it would be greater than 100 percent of the underpayment itself when combined with the original amount owed.