ExpertHard1 markMultiple Choice
CPA · Question 06 · Area 1: Ethics & Procedures
A taxpayer owes ,000 in taxes on a return filed 2 months late. They also paid the tax 2 months late. Assuming no extension was filed and no reasonable cause exists, what is the total failure-to-file and failure-to-pay penalty?
A taxpayer owes ,000 in taxes on a return filed 2 months late. They also paid the tax 2 months late. Assuming no extension was filed and no reasonable cause exists, what is the total failure-to-file and failure-to-pay penalty?
Answer options:
A.
0
B.
0
C.
0
D.
0
How to approach this question
Calculate FTF (5%/mo) and FTP (0.5%/mo). Remember: If both apply in the same month, reduce FTF by the FTP amount. Max FTF is 25%.
Full Answer
B.0✓ Correct
0
Penalty is 5% per month for failure to file, reduced by the 0.5% failure to pay penalty for any month both apply. Net FTF = 4.5%, FTP = 0.5%. Total 5% per month x 2 months = 10%. 10% of ,000 = ,000.
Common mistakes
Forgetting to reduce the Failure to File penalty by the Failure to Pay penalty.
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