Question

For failure to file a tax return by the due date, a penalty of _____ per month up to a maximum of _____ is imposed on the amount of tax shown as due on the return. Any fraction of a month counts as a full month.

a. 2.5%; 10%
b. 4.5%; 13.5%
c. 7%; 35%
d. 1%; 5%
e. 5%; 25%

Answer 1

The penalty for not filing a tax return by the due date is 5% per month, up to a maximum of 25% of the tax due. This penalty applies until the required return is filed with the IRS. The correct option is e.

Step-by-step explanation:

For failure to file a tax return by the due date, a penalty of 5% per month up to a maximum of 25% is imposed on the amount of tax shown as due on the return. Any fraction of a month counts as a full month. Therefore, the correct answer to the question is (e) 5%; 25%.

It's important to note that while marginal tax rates for a single taxpayer can range from 10% to 35% depending on income, these rates apply to taxable income, not to penalties for failing to file a tax return. Filing taxes is an annual requirement in the U.S., and penalties are strictly imposed by the Internal Revenue Service (IRS) to encourage timely and accurate submissions.

The penalty for failure to file a tax return by the due date is 5% per month, up to a maximum of 25%, of the tax shown as due on the return. Any fraction of a month is counted as a full month. So, if the tax shown as due on the return is $10,000, and the taxpayer fails to file for 2 months, the penalty would be $1,000 (5% of $10,000) per month, totaling $2,000.