Failure to file, penalty

[Sherill]

This is my first encounter. It appears to be pretty straight fwd, where my client pays 5%/mo with a maximum of $100? Therefore, if the amt is $269 for 2005, he just pays the add'l $100.00 ? Right? Or, does he pay no more than 25%....25% of 269 = 67.25?

[Bees Knees]

TTB page 15-2, "5% of unpaid balance per month - maximum 25%. More than 60 days late minimum of $100 or 100% of the tax due on return."

So in your case, if the balance due equals $269, the maximum penalty is 25% of $269 = $67.25. However, since it is more than 60 days late, the minimum penalty is $100.

[Bill Tubbs]

clarification

TTB page 15-2, "5% of unpaid balance per month - maximum 25%. More than 60 days late minimum of $100 or 100% of the tax due on return."

So in your case, if the balance due equals $269, the maximum penalty is 25% of $269 = $67.25. However, since it is more than 60 days late, the minimum penalty is $100.

From the 1040 Instruction booklet, pg 66:
"If your return is more than 60 days late, the minimum penalty will be $100 or the amount of any tax you owe, WHICHEVER IS SMALLER." (emphasis added)

So, Bees answer is correct -- just had left off the "whichever is smaller" detail.

Bill