Question

A delinquent penalty will be charged on unpaid taxes if a return is filed late. The penalty is 5 percent of the unpaid tax due for every month that the return is late, up to a maximum penalty of 25 percent of the unpaid tax. The minimum penalty is _____for tax years beginning on or after January 1, 2011 or 100 percent of the unpaid tax, whichever is less.

Select one:

a. $100

b. $135

c. $155

d. $195

Answer 1

The Answer is Option b. $135

According to IRS the minimum penalty to be paid for late filing of tax returns beyond a certain time period after the due date (original due date + any extensions given) is the lower of 100% of the tax required to be shown on the return that you didn’t pay on time, or a specific dollar amount that is adjusted annually for inflation. The specific dollar amounts are:

• $435 for returns due on or after 1/1/2020*
• $210 for returns due between 1/1/2018 and 12/31/2019
• $205 for returns due between 1/1/2016 and 12/31/2017
• $135 for returns due between 1/1/2009 and 12/31/2015
• $100 for returns due before 1/1/2009

As you can observe January 1, 2011 falls in the 4th time period and so the penalty would be lower of $135 or 100% of unpaid tax. The missing figure in question would be $135.