Tax-payment default penalties may continue after payment, subject to a tax-arrears ceiling, hearing safeguards, reasonable cause, and cancellation rules.

Penalty for default in payment of tax may be imposed in addition to tax arrears and applicable interest, including further amounts for a continuing default. The aggregate penalty cannot exceed the tax arrears. Before levy, the assessee must receive a reasonable opportunity of being heard, and penalty is barred where good and sufficient reasons for the default are established. Payment of tax before levy does not remove penalty exposure. If a final order wholly reduces the underlying tax amount, the penalty must be cancelled and any amount paid refunded.

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