David files his tax return 45 days after the due date. Along with the return, David remits a check for $40,000 which is the balance of the tax owed. Disregarding the interest element, David's total failure to file and to pay penalties are:

Question

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The failure to file penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late, up to a maximum of 25%. The failure to pay penalty is 0.5% of the unpaid taxes for each month or part of a month. For 45 days (1.5 months), the failure to file penalty is 7.5% (5% per month) and the failure to pay penalty is 0.75% (0.5% per month). Therefore, the total penalty is 8.25% of $40,000, which is $3,300 for failure to file and $300 for failure to pay, totaling $4,000.

David Files His Tax Return 45 Days After the Due