Small business owners often look to payroll service companies to handle their employee payroll. Reasons are that small business owners face complicated tax regulations and penalties for employment tax errors are costly. According to the Internal Revenue Service, 26% of all small business employment tax returns contained errors that resulted in a tax penalty to the owner (The Wall Street Journal, January 30, 2006). The tax penalty for a sample of 20 small business owners follows:

a. What is the mean tax penalty for improperly filed employment tax returns?
b. What is the standard deviation?
c. Is the highest penalty, $2040, an outlier?
d. What are some of the advantages of a small business owner hiring a payroll service company to handle employee payroll services, including the employment tax returns?

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