The excise tax under COBRA is also called a/an __?

• A. penalty tax
• B. payroll tax
• C. income tax
• D. excise tax

Answer: (A)

The main idea here is that the COBRA noncompliance tax is a penalty imposed on an employer for not following COBRA rules. While the formal name in the statute is an excise tax, it’s most commonly referred to as a penalty tax because it serves as a punitive remedy for failing to offer or properly administer COBRA continuation coverage. This distinguishes it from ordinary payroll taxes or income taxes, which are about general withholding or income liability rather than a targeted penalty for COBRA violations. So the best answer is the term that people typically use in practice to describe this COBRA-related charge: penalty tax.