If a taxpayer fails to file a return and it is no more than 60 days past the due date, what is the penalty for failure to file?

The penalty for failure to file a tax return is calculated based on a percentage of the amount owed. If a taxpayer fails to file a return and it is no more than 60 days past the due date, the penalty is set at 5% for each month the return is late, with a maximum penalty cap of 25%. This means that the longer the taxpayer delays in filing, the higher the penalty will accrue, up to that limit.

The design of the penalty system incentivizes timely filing by progressively increasing the penalty while placing a ceiling on the total amount to provide some relief for taxpayers who may experience unforeseen circumstances that delay their filing. In this case, since the question specifies a timeframe of no more than 60 days, the penalty structure aligns perfectly with the correct answer of 5% per month up to 25%.