Molly Ellen, bookkeeper for Keystone Company, forgot to send in the payroll taxes due on April 18. She sent the payment November 8. The IRS sent her a penalty charge of 8% simple interest on the unpaid taxes of $5,900.

Calculate the penalty. (Remember that the government uses exact interest

.08($5,900) = ?

572 To calculate the penalty charge, we need to find the simple interest on the unpaid taxes. Simple interest is calculated using the formula:

Simple Interest = Principal * Rate * Time

In this case, the principal is the unpaid taxes of $5,900, the rate is 8% (expressed as a decimal, 0.08), and the time is the number of days between April 18 and November 8. Let's calculate the penalty step by step:

1. Determine the number of days between April 18 and November 8:
- April 18 to April 30: 12 days (partial month)
- May 1 to May 31: 31 days
- June 1 to June 30: 30 days
- July 1 to July 31: 31 days
- August 1 to August 31: 31 days
- September 1 to September 30: 30 days
- October 1 to October 31: 31 days
- November 1 to November 8: 8 days
Total days: 12 + 31 + 30 + 31 + 31 + 30 + 31 + 8 = 204 days

2. Convert the rate from a percentage to a decimal: 8% = 0.08.

3. Calculate the penalty using the simple interest formula:
Simple Interest = Principal * Rate * Time
Penalty = $5,900 * 0.08 * (204/365)

Let's calculate the penalty using these steps:

Penalty = $5,900 * 0.08 * (204/365)
Penalty ≈ $2,065.75

Therefore, the penalty charge from the IRS is approximately $2,065.75.