Formula Duration in a nested if statement

Problem:

If([Appraisal Received]=true, (ToDays(([Appraisal Due Date]-[Appraisal Received Date]))))
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Solution:

Because the desired result is a rich text, the best route would be to create a formula - Rich Text field.
It's also best to define variables to separate and define the segments of the argument. 

Also, a solution to get a red background with white font would be to use a <p> tag with style attribute and concatenate into the formula. 

Try the following:
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Var Duration Days = ToDays([Appraisal Due Date]-[Appraisal Received Date]);

Var text Output1 = ToText($Days);

If($Days <= 0, "ON TIME",  "<p style='background-color:red;color:white'>"+$Output1+"</p>");

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this may not work initially due to some possible syntax errors but this should point you in the right direction.