REG – Taxpayer Penalties

CPA Exam Forum REG REG Review REG – Taxpayer Penalties

This topic contains 2 replies, has 2 voices, and was last updated by  Soproudofmyself 5 years, 7 months ago.

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    I'm confused about this and I don't wanna take any chances because I know I've seen this in prior exams =(

    The “Failure to Pay Penalty”: does not apply if (1) at least 90% of the tax is paid in by the unextended due date and (2) the balance of the tax is paid by the extended due date.

    ok that makes sense, but then Becker has an explanation to a question as follows:

    16,000 withheld from paychecks, filed a timely extension on April 15th and paid an additional $300, filed the tax return by the extended due date and tax liability was $16,500, taxpayer paid the remaining tax on extended due date.

    Becker explains that the taxpayer would not have a penalty for underpayment of taxes but that the “failure to pay penalty” would apply on the $200???? how is that so???? at least 90% was paid and the remaining balance was paid by the extended due date =/




    I have that question… the answer is zero. It is the first question on the last topic of chapter 2; Is it?

    But if what you facts are correct… She might pay penalty on the $200 because she paid after the due date. There is an automatic extension, if solicited, on filing, but NOT on paying… But since the amount is under $1000, no penalty for her. She is safe.

    I think that what they are saying in the explanation is that if the payment of the $200 were paid after that second chance, it would pay a penalty



    Yeah, that's the first question on chapter 2 (last section).

    So in this case because the taxpayer paid the appropriate amount of “estimated tax payments” then no “penalty for failure to make estimated income tax payments” –> as long as the underpayment does not exceed $1,000.

    Also, in this person's case, they are also NOT subject to the “failture to pay penalty” because they paid by the “extended” due date of april 30th and at least 90% was paid by April 15th. If this person paid after april 30th, then a failure to pay penalty would apply. This person; however, will get charged interest on the $200.

    Beckers explanation made it sound like they would be subject to the failure to pay penalty ughhh

    So many penalties…

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