what is an underpayment penalty 
an underpayment penalty is a fine charged by the internal revenue service irs when taxpayers don t pay enough of their estimated taxes due during the year don t have enough withheld from their wages during the year or pay late the underpayment is reported and the fine is applied when the taxpayer completes the annual tax return taxpayers must generally pay at least 90 of their taxes due during the previous year to avoid an underpayment penalty the fine can grow with the size of the shortfall taxpayers can consult irs instructions for form 2210 to determine whether they re required to report an underpayment and pay a penalty 