This year, the IRS audited Mr. and Mr. Simon's 2013 income tax return and determined that they underpaid their tax by $13,780. Which of the following statements is true?

Question

Quizplus · Accepted Answer

If the revenue agent concludes that the Simons made a reasonable attempt to compute their tax, they will still have to pay the underpayment of $13,780 plus interest on the underpayment. This is because interest accrues on the underpayment until it is paid in full. If the Simons were found to be negligent in preparing their return, the agent may also assess a penalty of up to 20% of the underpayment, which in this case would be $2,756 (20% of $13,780). However, it is not stated in the question whether the Simons were found to be negligent or not, so option D cannot be confirmed.

This Year, the IRS Audited Mr