John forgot to pay his $385 income tax on time. The IRS charged a penalty of 4% for the 3 days the money was late. Find the penalty that was paid. Use 365 day year.

Guest Apr 11, 2017

#1**+1 **

John forgot to pay his $385 income tax on time. The IRS charged a penalty of 4% for the 3 days the money was late. Find the penalty that was paid. Use 365 day year.

I do not think that your answer is complete.

If he pays 4% then that is

0.04*385 = $15.40

BUT I suspect that is was supposed to be 4% per annum 4% p.a.

and then the penalty would be

3/365*0.04*38 = 0.0124931506849315 = 1 cent

Melody
Apr 12, 2017

#2**0 **

Melody: A minor mistake:

[$385 x 4%] =$15.40 interest for 1 year.

[$15.40/365] x 3 days =0.1265....~13 cents.

Guest Apr 12, 2017

#3**0 **

So the answer is suppose to be $1.56. I think I figured it out. I=prt

I=(385)(0.04)(37/365) and when you multiply it all it ends up being $1.56.

Guest Apr 12, 2017

#4**+2 **

In your question, you wrote **3 days** not 37 days.

The question is brain dead, anyway. It’s inconsistent with the IRS tax laws.

**A** **penalty** assessed by the IRS **is not a per diem adjusted annual interest rate**.

Who wrote this brain-dead question? Does a retired Blarney Banker teach your class?

Here’s an overview of the IRS regulations.

**If you owe tax and don’t file on time**, according to IRS regulations, penalties are assessed and added to your bill. Penalties are **in addition to **** BOTH the tax due and the interest on the past due tax**.

**Generally, interest is charged on any unpaid tax from the original due date of the return until the date of payment.** The interest rate on unpaid Federal tax is determined and posted every three months. It is the federal short–term interest rate plus 3 percent. The interest is compounded daily.

Jan. 1, 2011 — Mar. 31, 2016 3%

Apr. 1, 2016 — Jan. 31, 2017 3.7%

Feb. 1, 2017 — Present 4.04%

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Mr. Blarney Banker this is a **major** oversight, a failure to notice, on your part.

It seems reasonable an investment banker would know basic tax law application. Of late, you’re a little out of the loop, but here are questions you may know the answer to:

** Does the IRS tax Ramen Noodles?**

**Does the IRS allow you to deduct blarney as a casualty to embezzled income?**

GingerAle
Apr 12, 2017