Penalty assessed by an Internal Revenue Service on a taxpayer for failure to pay a certain percentage of taxes to the government during the year. This is typically a result of a taxpayer claiming too many exemptions during the year, thus decreasing the amount that was deducted from their pay check for tax payments. Taxpayers can avoid this penalty by changing the exemptions claimed on their W-4 form or submitting estimated quarterly payments to the Internal Revenue Service before the end of the year.