Which penalty applies for failing to pay taxes on time?

The penalty for failing to pay taxes on time is indeed calculated as a percentage of the unpaid taxes, specifically at a rate of 5% per month. This penalty starts accruing from the due date of the tax return and continues to apply for each month or part of a month that the tax remains unpaid, up to a maximum of 25%. The intention behind this penalty is to encourage timely payment and compliance with tax obligations.

It's important to note that under the tax code, penalties are structured to reflect the responsibility of the taxpayer in fulfilling their obligations. The other options listed do not align with the guidelines established by the IRS for penalties on unpaid taxes. Option A, suggesting a flat 30% of unpaid taxes, does not represent any standard IRS penalty framework. Option B, a percentage of adjusted gross income, does not apply as a penalty mechanism and is unrelated to tax payment failure. Option D is also misleading, as it inaccurately suggests a penalty based on total income rather than the unpaid tax amount. Understanding the specifics of how penalties are imposed helps in ensuring compliance and avoiding unnecessary financial consequences.