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return. This addition to tax equals 5 percent of the amount
required to be shown as tax on the return for each month, or
fraction thereof, during which the failure to file continues, up
to a maximum of 25 percent. Sec. 6651(a)(1). For purposes of
computing the addition to tax, the amount required to be shown on
the return is reduced by the amount of any credit against the tax
which may be claimed on the return, and by the amount of the tax
which is paid on or before the date prescribed for payment of the
tax. Sec. 6651(b)(1).
Paragraph (2) of section 6651(a) imposes an addition to tax
for failure to pay the amount of tax shown on a return in a
timely manner. This addition to tax equals 0.5 percent of the
amount shown as tax on the return for each month, or fraction
thereof, during which the failure to pay continues, up to a
maximum of 25 percent. Sec. 6651(a)(2). For taxable years for
which a return is due after July 30, 1996 (without regard to
extensions), if a taxpayer fails to file a return the paragraph
(2) addition to tax may be calculated based upon the tax shown on
the substitute return prepared by the Secretary pursuant to
section 6020(b). Sec. 6651(g)(2); Taxpayer Bill of Rights 2,
Pub. L. 104-168, sec. 1301(b), 110 Stat. 1475 (1996). For
purposes of computing the addition to tax for any given month,
the amount of tax on the return is reduced by the amount of any
credit against the tax which may be claimed on the return, and by
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Last modified: May 25, 2011