Which penalty is imposed for failure to file a return after notice and demand?

Study for the Tax School Test. Prepare with interactive flashcards and multiple choice questions. Each question includes hints and detailed explanations. Get ready to ace your exam!

The penalty imposed for failure to file a return after notice and demand is based on a percentage of the total tax liability assessed. This means that the penalty scales with the amount of tax owed, leading to a more significant consequence for higher liabilities. This system serves as a deterrent against late filing and encourages taxpayers to meet their obligations in a timely manner.

In contrast, the other options do not accurately represent the nature of the penalty for late filing after a notice. A fixed dollar amount would apply uniformly regardless of the tax owed, a flat rate per month would not consider the total liability, and a specific interest rate pertain to the accumulation of interest on unpaid taxes rather than a penalty for failure to file. This understanding reinforces the importance of timely filing and the financial ramifications of neglecting this responsibility.