CPP Exam Penalties

Question 1

Late filing of Form 940/Federal Income Tax

Answer 1

5% of the amount of the tax for each month or fraction of a month the return is late up to a maximum of 25%

15% per month up to a maximum of 75% of the tax if the late filing is fraudulent

Question 2

Failure to pay FUTA/Federal Income tax

Answer 2

0.5% of any unpaid tax shown on the return for each month up to a maximum of 25%

An additional 0.5% per month of any unpaid tax not shown on the return but for which the IRS has issued a notice and demand, if the tax is not paid within 21 days of the notice and demand (10 business days if the amount is at least $100,000) up to a maximum of 25%

Question 3

Penalties for Failure to Deposit on time

Answer 3

2% of the undeposited amount within 5 days of due date

5% of the undeposited amount within 6-15 days after the due date

10% of the undeposited amount more than 15 days after the due date

15% of the undeposited amount of it is not paid within 10 days after the employer receives its first IRS delinquency notice or on the same day a notice and demand for payment is received

Question 4

Failure to file Information Returns

Answer 4

$50 per return of corrected within 30 days after the due date

$100 per return if corrected more than 30 days after the due date

$260 per return if not corrected by August 1st