Safe Harbor Rule

[seyf HAHR-ber rool]

What is the definition of Safe Harbor Rule?

A provision in statutes and regulations that offers protection from adverse legal action or penalties if specific conditions are met, particularly when a legal requirement is ambiguous or carries a risk of unintended violation.

Using Safe Harbor Rule in an Example

In accounting, the Safe Harbor Rule allows companies to avoid penalties for underpayment of estimated taxes if they pay a specified percentage of their current or previous year's tax, thereby providing a clear guideline and reducing the risk of penalties due to estimation errors.

Using Safe Harbor Rule in a sentence

Our CFO ensured that we adhered to the Safe Harbor Rule to prevent any potential legal issues during the financial audit.

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