QUESTION 7 Please calculate the penalty if any on a Total Sa

QUESTION 7 Please calculate the penalty if any on a Total Sales Tax Collected of $6,617.06 that is filed 145 days late. Do not enter a $ in the answer box.

Solution

Failing to file or remit collected sales tax to the state will result in a penalty of 5% of the total unpaid tax due for the first two months or part of month. After two months, the 5% interest penalty is applied each month or part of month with the maximum late penalty being capped at 25% of the unpaid tax owed.

In the given case, state tax of $6,617.06 is filed late after almost 5 months

Penalty = $(6,617.06 x 5%) + (6,617.06 x 5% x 3 months) = 330.853 + 992.559 = $1,323.412

NOTE: In the given question it is not specified for which state we are filing sales tax return. We have considered State of Michigan in the absence of given information. Answer can vary from state to state as Sales tax is collected by state only.