In the following 2 examples, the payoff date is August on a current year tax record (12% penalty, 7% interest, and 15% attorney fees). Example 1 will show a penny more due after the payment is applied and example 2 will show a penny less due after the payment is applied. These rounding errors can occur on accounts when a partial payment is applied to an account when penalty, interest, or attorney fees are involved.
Example 1:
base tax due = $23,115.60
penalty due = 23,115.60 x 0.12 = 2,773.872 = $ 2,773.87
interest due = 23,115.60 x 0.07 = 1,618.092 = $ 1,618.09
-----------
= $27,507.56
attorney fees = 27,507.56 x 0.15 = 4,126.134 = $ 4,126.13
-----------
total due (Payoff amount) = $31,633.69
----------------------------------------------------------
The taxpayer is making a payment amount of $2,634.69.
base tax paid = 2,634.69 / 31,633.69 x 23,115.60 = 1,925.23984 = $1,925.24
penalty paid = 2,634.69 / 31,633.69 x 2,773.87 = 231.02861 = $ 231.03
interest paid = 2,634.69 / 31,633.69 x 1,618.09 = 134.76662 = $ 134.77
attorney paid = 2,634.69 / 31,633.69 x 4,126.13 = 343.65492 = $ 343.65
----------
total paid = $2,634.69
1,925.24 is applied to the base tax of 23,115.60 leaving 21,190.36.
---------------------------------------------------------------------------
After the payment is applied, this will leave a base tax due of 21,190.36.
The new payoff amount for August:
base tax due = 23,115.60 - 1,925.24 = $21,190.36
penalty due = 21,190.36 x 0.12 = 2,542.8432 = $ 2,542.84
interest due = 21,190.36 x 0.07 = 1,483.3252 = $ 1,483.33
-----------
= $25,216.53
attorney fees = 25,216.53 x 0.15 = 3,782.4795 = $ 3,782.48
-----------
total due = $28,999.01
-----------------------------------------------------------
If you take the original balance of 31,633.69 due and subtract out the payment of 2,634.69 you get 28,999.00. As you can see from above the new balance is 28,999.01. A difference of 0.01. This is due to rounding.
Another way to look at this is to take the original balance of $31,633.69 due and subtract out the payment of $2,634.69 you get $28,999.00. If you take the base tax of $21,190.36 and then add in the calculated penalty, interest, and attorney fees you get 28,999.01 due (a penny more). So if you take the base tax due and subtract a penny you get $21,190.35 and then add in the calculated penalty, interest, and attorney fees you get 28,998.99 (1 cent short).
___________________________________________________________________________
Example 2:
base tax due = $23,115.64
penalty due = 23,115.63 x 0.12 = 2,773.8756 = $ 2,773.88
interest due = 23,115.63 x 0.07 = 1,618.0941 = $ 1,618.09
-----------
= $27,507.61
attorney fees = 27,507.60 x 0.15 = 4,126.14 = $ 4,126.14
-----------
total due (Payoff amount) = $31,633.75
-----------------------------------------------------------
The taxpayer is making a payment amount of $2,634.62.
base tax paid = 2,634.62 / 31,633.75 x 23,115.64 = 1,925.18837 = $1,925.19
penalty paid = 2,634.62 / 31,633.75 x 2,773.88 = 231.02287 = $ 231.02
interest paid = 2,634.62 / 31,633.75 x 1,618.09 = 134.76278 = $ 134.76
attorney paid = 2,634.62 / 31,633.75 x 4,126.14 = 343.64598 = $ 343.65
----------
total paid = $2,634.62
1,925.19 is applied to the base tax of 23,115.64 leaving 21,190.45.
---------------------------------------------------------------------------
After the payment is applied, this will leave a base tax due of 21,190.45.
The new payoff amount for August:
base tax due = 23,115.64 - 1,925.19 = $21,190.45
penalty due = 21,190.45 x 0.12 = 2,542.8540 = $ 2,542.85
interest due = 21,190.45 x 0.07 = 1,483.3315 = $ 1,483.33
-----------
= $25,216.63
attorney fees = 25,216.63 x 0.15 = 3,782.4945 = $ 3,782.49
-----------
total due = $28,999.12
-----------------------------------------------------------
If you take the original balance of $31,633.75 due and subtract out the payment of $2,634.62 you get $28,999.13. As you can see from above the new balance is $28,999.12. A difference of $0.01-. This is due to rounding.
Another way to look at this is to take the original balance of $31,633.75 due and subtract out the payment of $2,634.62 you get $28,999.13. If you take the base tax of $21,190.45 and then add in the calculated penalty, interest, and attorney fees you get 28,999.12 (1 cent short). So if you take the base tax due and add a penny you get $21,190.46 and then add in the calculated penalty, interest, and attorney fees you get $28,999.15 (2 cents more).
___________________________________________________________________________