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?
A)$700
B)$1,400
C)$5,600
D)$1,750

Question

Quizplus · Accepted Answer

The negligence penalty is typically 20% of the portion of the tax liability attributable to negligence. In this case, 20% of $7,000 (the amount attributable to negligence) equals $1,400.

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