REG – Failure to Pay Penalty Question

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  • #3304186
    ac
    Participant

    Marcy Mason, an individual calendar-year taxpayer, has a balance due on her Year 1 individual income tax return of $2,200. The total tax liability on her Year 1 return was $18,000. Assuming that Marcy does not show reasonable cause for any late filing or late payment of the tax due on her return.

    On April 15, Year 2, Marcy filed a six-month extension of time to file her Year 1 return. She filed her Year 1 return and paid the tax due on
    October 10, Year 2.

    Answer: $2,200 Underpayment × 0.005 Penalty rate × Months (including partial months) tax due was not paid = $2,200 × 0.005 × 6 months = $66

    Why is the answer $66? Shouldn't it be $77?

    $2,200 Underpayment × 0.005 Penalty rate × 7 Months (Apr+May+Jun+Jul+Aug+Sept+Oct) = $77 ?

    #3304207
    RobOh
    Participant

    It is really only 6 months, not 7 months. See below:
    1. 4/15 to 5/14
    2. 5/15 to 6/14
    3. 6/15 to 7/14
    4. 7/15 to 8/14
    5. 8/15 to 9/14
    6. 9/15 to 10/10

    FAR - 78

    BEC - 87

    REG - 82

    AUD - 82

    #3304237
    ac
    Participant

    Thanks for the breakdown – really helps 🙂

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