@Tara125, if it is just an Inquiry (and not even a Booking Request), you don't even have to decline it. (If it is an Inquiry, the buttons will say "Pre-Approve" and "Decline", as opposed to "Accept" and "Decline" for a Booking Request). For Booking Requests, you *do* have to Accept or Decline within 24 hours to keep your response rate high.
For Inquiries, just make sure you respond to the traveler with a message and you have fulfilled your obligation as a host. The notification that you should Pre-Approve or Decline the Inquiry will stick around for about a week, but you can just ignore it.
The "penalty" for declining Inquiries and Booking Requests are that if your rate of Declining is higher than your nearby hosts, it somewhat lowers your ranking in the search results.