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While there are quite a few different types of abatement, most refer to a fee or charge that must be paid, but which is being forgiven or unenforced for a particular reason. One of the most common types can be applied to taxes that may be owed or should be owed in the future, sometimes called a “tax holiday.” Temporary interest rate abatement may be offered in some instances by a lending institution to encourage borrowing from that particular institution. Abatement can also be requested for a penalty fee or similar expense under certain circumstances.
Tax abatement, especially for property or real estate tax, is one of the most common ways in which a fee or expense can be forgone temporarily. This is often done by a particular country or region to promote development of new business or encourage increased growth of communities within a certain area. Such offers are typically temporary in nature, and after a certain period passes, the standard tax rate is charged to the company or landowner. This lack of taxing is often referred to as a “tax holiday” and has been criticized by some for withholding needed financing from the government, while having only a negligible positive impact on the economy.
Interest rate abatement can be offered by a lending institution to promote borrowing from that institution. This is often a temporary measure, usually for the first six months or year of a loan, and during that time the borrower does not accrue interest on the loan. Similar offers are frequently made by credit card companies, or particular retail businesses that offer a company credit card, to encourage spending at certain times by customers. Interest rate abatement for a credit card can be somewhat detrimental for a customer, however, as the unpaid interest is often charged to the customer if the full amount is not paid off during the abatement window.
Abatement is also frequently utilized when dealing with penalty fees that have been charged to a person by a company or agency. This is frequently done with taxes owed to the government of a country, which are not properly paid on time. Punitive fees can be charged to the person who owes the taxes, and the person may be able to request forgiveness for the fees under certain circumstances. These are usually rather extreme circumstances that may have prevented the person from paying his or her taxes on time, such as severe illness or the loss of a home due to natural disaster.
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