Penalty

Penalty means:
the money or other cost one person pays for breaking a tax law or violating part or all of the terms of a contract. The General Laws of some States (like Massachusetts) provide for the imposition of penalties when taxpayers fail to comply with those States' tax laws. The General Laws also permit the Commissioner of Revenue to waive or abate such penalties under certain circumstances. Penalties are meant to provide taxpayers with an incentive to comply voluntarily with their tax obligations. Penalties are often imposed for prepaying a loan, failing to complete a contract sale, or breaking a lease; such penalties are not tax deductible.

See also other Tax Terms and Definitions in U.S.A.

specific tax penalties.

U.S. and other Developed Countries International Tax Meaning

Administrative penalties are imposed for tax offences, such as failure to make a timely return or payment, negligence, and making a false return or statement. They take the form of additions to the tax and are assessed as part of the tax. Criminal penalties, on the other hand, are enforceable only by prosecution. A prison sentence may be imposed for serious tax fraud.

Description and Definition of Penalty

A fine charged by the IRS for various infractions including filing your tax return and/or paying your taxes late. The amount of the fine depends on the nature of the infraction. You may be charged interest in addition to penalties. Tax penalties are not deductible.

Resources

See Also

Further Reading

• Penalty in the West's Tax Law Dictionary
• Penalty in “A Dictionary of Taxation”