A red tag is the AHJ's formal notice that work cannot proceed (or, on equipment, cannot be operated) until the cited deficiency is corrected. Building inspectors red-tag work that fails inspection, lacks a permit, deviates from approved drawings, or creates a safety hazard. Fire marshals red-tag fire-rated assemblies with non-compliant penetrations. Utility companies red-tag electrical service that doesn't meet their standards. Crews must stop work in the affected area until the tag is cleared by re-inspection.
Red tags cost time and money: schedule delay, demobilization and remobilization of trades, inspector re-call fees, and direct correction cost. The most common red-tag triggers in commercial work are: missed inspection (work covered before inspection), unpermitted scope, fire-rated assembly violations, deviations from approved structural drawings, and safety violations (open excavations, unbarricaded edges, unsafe scaffolding). Avoiding red tags through tight inspection scheduling and approved-drawing compliance is far cheaper than fixing them after the fact.