See Special Enrollment Exam Quiz
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SEE PART 1: INDIVIDUALS
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Which of the following is correct regarding the failure-to-file and failure-to-pay penalties under IRC § 6651 for a 2025 individual income tax return?
A
When both the failure-to-file and failure-to-pay penalties apply for the same month, the failure-to-file penalty is reduced by the failure-to-pay penalty for that month, so the combined charge for each of the first five months is 5% of the unpaid tax.
B
The failure-to-file penalty accrues at 0.5% of the unpaid tax for each month or part of a month, while the failure-to-pay penalty accrues at 5% per month, with each penalty capped at 25% of the tax.
C
If the return is filed more than 60 days after its due date, the minimum failure-to-file penalty is the lesser of $525 or 100% of the tax shown on the return, based on the liability the taxpayer reported.
D
Once the failure-to-file penalty reaches its 25% maximum, the failure-to-pay penalty stops accruing as well, so both penalties together can never exceed 25% of the unpaid tax for that return.
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