Tax returns filed manually have a 20% chance of containing errors, while tax returns filed electronically have a 0.05% chance of containing the same. If 2.7 million tax returns are filed each way, how many more erroneous manually filed returns will there be than erroneous electronically filed returns?

Question

a.
270,675
b.
538,650
c.
541,350
d.
269,325

Answer 1

To find the difference in erroneous returns filed manually and electronically, we need to calculate the number of erroneous returns for each method.

For manually filed returns, the chance of error is 20%, so the number of erroneous returns is 20% of 2.7 million: 0.2 * 2,700,000 = 540,000.

For electronically filed returns, the chance of error is 0.05%, so the number of erroneous returns is 0.05% of 2.7 million: 0.0005 * 2,700,000 = 1,350.

Therefore, the difference is 540,000 - 1,350 = 538,650.

Therefore, the answer is (b) 538,650.