A taxpayer's return is audited and additional taxes are assessed. The IRS also asserts that a negligence penalty should be assessed. The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence. What is the amount of the penalty for negligence?

Question

Quizplus · Accepted Answer

The negligence penalty is typically 20% of the portion of the underpayment attributable to negligence. Therefore, 20% of $7,000 is $1,400.

A Taxpayer's Return Is Audited and Additional Taxes Are Assessed