Which type of expense related to developing a compliance program is not tax deductible?

Expenses resulting from an imposed penalty are not tax deductible because they are viewed by the IRS as fine or penalty payments for noncompliance with regulations or laws. The tax code specifically disallows deductions for amounts paid or incurred as fines or penalties, emphasizing the principle that one should not benefit financially from violating the law. This aligns with the concept of maintaining integrity and accountability in compliance-related practices.

In contrast, training expenses, consultation fees, and technology upgrades are generally considered necessary costs associated with establishing and maintaining an effective compliance program. These expenses are aimed at promoting compliance with regulations and enhancing organizational practices, which are deemed legitimate business expenses and thus are tax deductible.