This verse opens the second movement of the father's lecture on wisdom and the neighbor, Proverbs 3:21–35. Some treat v. 27 as the start of a separate unit; this catalog reads 21–35 as one lecture, noted in the unit explanation.
Quick answer
If good is owed and your hand can deliver it, deliver it. The quietest form of wrongdoing is not doing harm, just not doing the good that was yours to do.
Read the whole unit
The father's lecture on wisdom and the neighbor moves in three sweeps. First, security (vv. 21–26): keep sound wisdom in view and the results are bodily and immediate, safe steps, unafraid nights, sweet sleep, because "the LORD will be your confidence." Second, the neighbor (vv. 27–31): five consecutive "do nots" that bring wisdom down from the cosmos of the preceding poem to the person next door. Do not withhold good that is owed, do not delay it until tomorrow, do not plot against the neighbor who trusts you, do not pick fights, and do not envy the violent man who seems to be winning. Third, the reasons (vv. 32–35): four verses that ground neighbor-ethics in the LORD's own stances, His abomination and His intimacy, His curse and His blessing, His scorn and His grace, and the divergent inheritances of the wise and the foolish. Some scholars divide the passage at v. 27, treating the neighbor commands as their own unit; the flow of thought holds together as one lecture, since the "do nots" rest directly on the security just described (a person confident in the LORD can afford to be generous and unenvious) and the closing verses supply the reasons for both halves. This entry set treats 3:21–35 as one lecture and notes the boundary question honestly here, once.
What this verse contributes
The NKJV's footnote is worth surfacing: "those to whom it is due" is literally "its owners." The good you are withholding already belongs to someone else, unpaid wages, undelivered help, unspoken words that would lift a person, all sitting in your hand with someone else's name on it. Withholding is not neutrality; it is holding another man's property. The condition "when it is in the power of your hand" is honest about limits but removes the favorite excuse of the able. James compressed the verse into one line: to him who knows to do good and does not do it, to him it is sin (James 4:17).
Related: James 4:17 · Galatians 6:10
New King James Version®, Copyright © 1982, Thomas Nelson. All rights reserved. Full copyright information. Scripture provided by API.Bible.
Go Deeper
If this verse has been used to put weight on you that it was never carrying, ask about it directly.