Tax Penalty and Notice Terms: US, Canada and India Glossary

Tax penalty and notice terms sound alike across the United States, Canada and India, but the letters do not work the same way: an IRS CP2000 proposes a change, a CRA notice of assessment states the result and an Indian intimation reports how your return was processed. This glossary defines the key penalty, notice and compliance terms, shows the closest equivalent in each country and links to the guide that explains the response.

Tax penalty and notice terms at a glance

Terms A to C

Abatement

Abatement is the removal or reduction of a penalty. The IRS considers first-time abatement and reasonable cause, and interest on a removed penalty is removed with it. The IRS says first-time abatement is transitioning to an Automatic Exemption from Penalty starting in summer 2026. See the penalty abatement playbook.

Equivalents: Canada, taxpayer relief. India, a waiver application.

Accuracy-related penalty

The U.S. penalty is 20 percent of the part of an underpayment caused by negligence or a substantial understatement. For individuals, a substantial understatement means understating the tax by the greater of 10 percent of the tax required to be shown or $5,000. It can be reduced for reasonable cause and good faith. See IRS notices first steps.

Appeals

An appeal is a request that someone independent review the tax authority's position. Each country has its own steps: IRS Appeals and the Tax Court, a notice of objection in Canada and an appeal to the Commissioner of Income Tax (Appeals) then the Tribunal in India. See CRA objections and appeals and Indian appeals to CIT(A) and ITAT.

Audit

An audit examines a return. The IRS runs correspondence, office and field audits; the CRA conducts audits and sends information requests; India selects returns for scrutiny assessment. See IRS audit types and response and India's scrutiny process.

Authorized representative

A person you permit to deal with the tax authority for you: Form 2848 in the U.S., a CRA representative authorization in Canada and an authorization on the e-Filing portal in India. See authorized representatives by country.

Black Money Act (India)

India's Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act can penalize undisclosed foreign assets or income and, for serious cases, prosecute. A one-time disclosure window for small foreign assets, the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, had its rules and forms notified on September 1, 2026; confirm eligibility and dates with your CA. See Schedule FA and Black Money Act disclosure and India foreign asset penalties.

BOI penalty

The Corporate Transparency Act's civil penalty for willful BOI reporting violations is adjusted to $606 per day for penalties assessed on or after January 17, 2025. Since FinCEN's August 2026 final rule, U.S. companies do not file. See beneficial ownership reporting 2026.

CP2000

A CP2000 is an IRS notice proposing changes because information reported by a payer, such as a Form 1099, does not match your return. It is not a bill: you agree, or you respond with evidence by the date on the notice. See responding to a CP2000.

CP14 and CP504

CP14 is the IRS's first balance-due notice. CP504 warns that the IRS intends to levy property or refunds, and a formal final notice with hearing rights follows. See balance-due and collection notices.

Terms D to I

Demand notice (India)

An Indian demand notice states tax, interest or fee payable after processing or assessment. The e-Filing portal has a Demand Management Facilitation Centre to help taxpayers with outstanding demands. Respond within the time stated and consider a rectification request if the demand looks wrong. See India income tax notices overview.

FBAR penalty

Penalties for not filing the FBAR are adjusted for inflation: up to $16,536 per non-willful violation and, for willful violations, the greater of $165,353 or a share of the account balance, for penalties assessed on or after January 17, 2025. See IRS foreign reporting penalties and our FBAR reminders for 2026.

Failure to file and failure to pay

In the U.S., the failure-to-file penalty is 5 percent of unpaid tax per month, up to 25 percent, and for returns due after December 31, 2025 the minimum for a return more than 60 days late is $525. The failure-to-pay penalty is 0.5 percent a month up to 25 percent, 0.25 percent during an approved payment plan if you filed on time and 1 percent after a notice of intent to levy. See IRS balance-due and collection notices.

FBAR penalty

Penalties for not filing the FBAR are adjusted for inflation: up to $16,536 per non-willful violation and, for willful violations, the greater of $165,353 or a share of the account balance, for penalties assessed on or after January 17, 2025. See IRS foreign reporting penalties and our FBAR reminders for 2026.

First-time abatement (FTA)

FTA waives certain penalties if you have a clean record: the same return type timely filed for the prior three years, and no penalties or only abated ones. It covers failure to file, failure to pay and failure to deposit. Ask on the phone number on the notice or send a written request or Form 843. See the penalty abatement playbook.

Form 8938 penalty

The failure-to-file penalty for Form 8938 is $10,000, with up to $50,000 more for continued failure after IRS notice, a 40 percent penalty on understatements tied to undisclosed assets and a six-year assessment period when more than $5,000 of income from a specified foreign asset is left out. See IRS foreign reporting penalties.

Gross negligence penalty (Canada)

Canada can add a penalty where a taxpayer knowingly, or with gross negligence, makes a false statement on a return. For foreign reporting, the T1135 gross negligence penalty is $500 per month for up to 24 months, to a $12,000 maximum. See CRA penalties and interest.

Information request

The CRA can send a request for information or a review letter that asks for documents. Respond fully by the date shown; a missed deadline can lead to an assessment based on available information. See CRA information requests and audits.

Interest

Interest compounds on unpaid tax and penalties. The IRS rate for individuals is 7 percent a year for the fourth quarter of 2026, compounded daily. The CRA charges prescribed interest compounded daily on balances owing. See CRA penalties and interest and India penalties and interest.

Intimation (India)

After processing your return, the department sends an intimation showing the tax computed, any refund or demand and any mismatch with the return. Under the 1961 Act, which governs assessment year 2026-27, this is the section 143(1) intimation; the 2025 Act renumbers provisions. Respond on the portal if you disagree. See intimation and rectification.

Equivalents: U.S., CP2000 or notice of adjustment. Canada, NOA.

Terms L to R

Levy and lien

A lien is the government's legal claim on your property for unpaid tax; a levy actually seizes assets such as wages or bank funds. In Canada the equivalents are a requirement to pay and a garnishment; India issues attachment orders. See IRS payment plans and offers and CRA collections.

Notice of assessment (NOA) and notice of reassessment

After you file, the CRA issues an NOA showing your tax, refund or balance, RRSP room and carryforwards. A notice of reassessment follows if the CRA changes it. The normal reassessment period for individuals is generally three years, and the CRA can extend it by three years where income from specified foreign property was unreported and a T1135 was late or false. See NOA and reassessment.

Notice of objection

In Canada, you dispute an assessment by filing a notice of objection, generally within 90 days of the date on the notice. The CRA reviews it, and you can then appeal to the Tax Court of Canada. See CRA objections and appeals.

Payment plan

A payment plan, or installment agreement in the U.S., lets you pay over time with interest and penalties continuing. The CRA offers payment arrangements, and India allows installment requests on a demand in some circumstances. See IRS payment plans and offers.

Reasonable cause

Reasonable cause means circumstances beyond your control that prevented compliance despite ordinary business care. The IRS and CRA both consider it, and it should be documented with dates and evidence. See the penalty abatement playbook.

Rectification (India)

Rectification is a request to correct an apparent mistake in an intimation or order, such as a missed TDS credit. You file it online with your evidence and there is a time limit, so act promptly. See India intimation and rectification.

Revised and updated returns

A revised return corrects an earlier return within a time limit. An updated return (ITR-U) lets you add income after that period, usually with additional tax. The e-Filing portal has also published updated-return utilities for assessment year 2022-23 under the Finance Act, 2026. See amended returns and corrections by country.

Terms S to Z

Scam alerts

The IRS says it will never call, email, text or message you on social media to ask for your Identity Protection PIN. FinCEN does not charge a fee for BOI, and the CRA says its emails do not ask for personal information or contain links. See scam alerts for the IRS, CRA and India.

Scrutiny assessment (India)

A scrutiny assessment is a detailed examination of a selected Indian return, run through the faceless system with notices and e-proceedings on the portal. See India scrutiny assessment process.

Statute of limitations

The period during which a tax authority can assess additional tax. The U.S. general period is three years from filing, longer for substantial omissions. Canada's normal period is generally three years for individuals. See audit and assessment timelines by country.

T1135 penalties

Late-filing penalties for Form T1135 are $25 a day for up to 100 days, with a $100 minimum and a $2,500 maximum. A false statement or omission is penalized at the greater of $24,000 or 5 percent of the cost or value. See T1135 foreign property reporting.

Taxpayer relief (Canada)

The CRA can waive or cancel penalties and interest where extraordinary circumstances, CRA error or financial hardship prevented compliance. Requests are made in writing. See CRA penalties and interest.

Voluntary Disclosures Program (VDP)

The VDP lets Canadian taxpayers correct past non-compliance before the CRA acts. It requires a voluntary and complete disclosure made before the CRA begins enforcement action, and it may reduce penalties and some interest. See CRA Voluntary Disclosures Program.

How we can help

From the Aurora, Illinois area we review IRS and Illinois notices, prepare responses and coordinate with your Canadian CPA or Indian Chartered Accountant for CRA and Indian notices. We do not represent clients before the CRA or Indian tax authorities. See IRS and state tax representation and foreign account and asset reporting. Browse the full tax and compliance glossary for the other term sets.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.