Tax Relief Glossary
Tax resolution comes with a lot of jargon. Here are the key IRS and tax-debt terms, explained in plain English — with links to learn more about each one.
Audit (Examination)
An IRS review of a tax return to verify that income, deductions, and credits are reported correctly. Audits can be by mail (correspondence), in an office, or in the field. Learn about audit representation and common audit triggers.
Back Taxes
Taxes that were not paid in the year they were due. Back taxes accrue penalties and daily-compounding interest until resolved. See our back taxes guide.
Bank Levy
A one-time seizure of funds in your bank account to satisfy a tax debt. The bank holds the funds for 21 days before sending them to the IRS — a critical window to act. See tax lien & levy release.
Collection Statute Expiration Date (CSED)
The date the IRS's legal right to collect a tax debt ends — generally 10 years from assessment. Certain actions (an Offer in Compromise, bankruptcy, or appeals) pause the clock.
Currently Not Collectible (CNC)
A status the IRS grants when you cannot pay anything without forgoing basic living expenses. While in CNC, active collection is paused, though interest continues to accrue.
Discharge (of Lien)
Removing a federal tax lien from a specific piece of property so it can be sold, while the lien remains on your other assets.
Doubt as to Collectibility
The most common basis for an Offer in Compromise: you cannot pay the full tax debt before the collection statute expires, given your income and assets.
Doubt as to Liability
A basis for settling when there is a genuine dispute about whether you actually owe the assessed tax — for example, if the assessment was based on a Substitute for Return.
Effective Tax Administration (ETA)
An Offer in Compromise basis used when you technically could pay, but doing so would create economic hardship or be unfair due to exceptional circumstances.
Enrolled Agent (EA)
A federally licensed tax practitioner with unlimited rights to represent taxpayers before the IRS. EAs, CPAs, and attorneys are the three credentials authorized for full IRS representation.
Failure-to-File Penalty
A penalty of 5% of unpaid tax per month (up to 25%) for filing a return late. It is ten times larger than the failure-to-pay penalty, which is why filing on time matters even if you cannot pay.
Failure-to-Pay Penalty
A penalty of 0.5% of unpaid tax per month (up to 25%) for paying late. It can sometimes be removed through penalty abatement.
First-Time Abatement (FTA)
An administrative waiver that removes failure-to-file and failure-to-pay penalties for taxpayers with a clean compliance history for the prior three years. See how to remove IRS penalties.
Form 2848 (Power of Attorney)
The IRS form that authorizes a licensed representative — an Enrolled Agent, CPA, or attorney — to speak and act on your behalf before the IRS. Filing it is how a firm like ours takes over IRS contact.
Form 433-A / 433-F (Collection Information Statement)
The IRS financial disclosure forms used to document your income, expenses, and assets when requesting an installment agreement, Currently Not Collectible status, or an Offer in Compromise.
Form 656 (Offer in Compromise)
The official IRS form used to submit an Offer in Compromise, filed with Form 433-A (OIC) and the required application fee and initial payment.
Form 9465 (Installment Agreement Request)
The IRS form used to request a monthly payment plan. Compare payment plan options before choosing a plan type.
Fresh Start Program
A set of IRS policy changes that expanded access to lien relief, installment agreements, and the Offer in Compromise. Read the Fresh Start guide.
Innocent Spouse Relief
Relief that removes a taxpayer's liability for tax understated by a spouse or former spouse on a joint return. Learn about innocent spouse relief.
Installment Agreement
An IRS payment plan that lets you pay a tax debt over time in monthly installments. Types include streamlined, non-streamlined, and partial payment. Compare payment plan options.
Levy
The IRS actually seizing your assets — such as funds from a bank account or a portion of your wages — to satisfy a tax debt. Distinct from a lien. See lien vs. levy.
Lien (Federal Tax Lien)
The government's legal claim against your property to secure a tax debt. A lien does not seize property; it secures the debt and can affect selling or refinancing.
Notice of Deficiency (90-Day Letter)
A formal IRS notice proposing additional tax that gives you 90 days to petition the U.S. Tax Court before the tax is assessed. Often follows an unresolved CP2000 notice.
Notice of Federal Tax Lien (NFTL)
The public document the IRS files to alert creditors that a federal tax lien attaches to your property. It can affect credit, refinancing, and asset sales.
Offer in Compromise (OIC)
An agreement that settles a tax debt for less than the full amount owed, based on your reasonable collection potential. Read how an OIC works.
Partial Payment Installment Agreement (PPIA)
An installment agreement with payments set below full repayment; any balance remaining when the CSED expires is never collected — effectively a settlement paid over time.
Penalty Abatement
The removal or reduction of IRS penalties through First-Time Abatement or reasonable-cause relief. See our penalty abatement service.
Reasonable Cause
A basis for removing penalties when circumstances outside your control (illness, disaster, loss of records) prevented compliance despite ordinary care and prudence.
Reasonable Collection Potential (RCP)
The IRS's estimate of what it can collect from your assets plus future disposable income. RCP determines the minimum acceptable Offer in Compromise.
Revenue Officer
An IRS collection employee assigned to pursue more serious or higher-balance cases in the field, with authority to issue levies and file liens.
Statute of Limitations (Assessment)
The period during which the IRS can assess additional tax — generally three years from filing, six years for substantial underreporting, and unlimited for fraud or unfiled returns.
Streamlined Installment Agreement
A simplified IRS payment plan for balances under a set threshold that does not require a full financial disclosure. One of several installment agreement types.
Subordination (of Lien)
An IRS agreement to let another creditor move ahead of its tax lien, often to allow you to refinance a mortgage.
Substitute for Return (SFR)
A return the IRS files on your behalf when you do not file, using reported income but no deductions or credits — almost always overstating the tax. Filing your own return replaces it. See haven't filed in years.
Tax Transcript
An official IRS record of your account, return, or wage and income data. Pulling transcripts is the first step in any accurate resolution strategy. Request yours at IRS Get Transcript.
Trust Fund Recovery Penalty (TFRP)
A penalty that makes business owners and other "responsible persons" personally liable for unpaid payroll (trust fund) taxes withheld from employees. A serious exposure for small businesses with payroll tax debt.
Underreporter (AUR / CP2000)
The IRS Automated Underreporter program matches third-party data (W-2s, 1099s) to your return and proposes changes when they do not match — sent as a CP2000 notice. It is a proposal, not a bill.
Wage Garnishment (Wage Levy)
A levy that requires your employer to send a large portion of your paycheck to the IRS. Learn how to stop a wage garnishment.
Withdrawal (of Lien)
Removing the public Notice of Federal Tax Lien as if it were never filed — often available after entering a direct-debit installment agreement.
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