Terminate taxes internally (3)
I believe the answer is:
axe
'terminate' is the definition.
(axing is a kind of terminating)
'taxes internally' is the wordplay.
'internally' says the answer is hidden in the clue.
'AXE' can be found hidden inside 'taxes'.
(Other definitions for axe that I've seen before include "Dispense with" , "Get rid of" , "Sack with cleaver?" , "Means of cutting" , "Chopping tool with heavy blade" .)