Under the United State's tax code, underpayment tax penalty is a term used to describe an individual who has paid some, but not all of the taxes owed to the agency. This penalty goes in place for those who have not paid enough of the total estimated tax and withholding according to the requirements of the agency. Estimated tax is the amount of tax the individual is likely to have to pay in the following months or year, based on their past payments and income. If the individual underpays, the IRS or other tax body may charge a penalty to the individual. Those who are required to pay a tax penalty may be able to reduce this penalty with the aid of an attorney specializing in tax reduction.