Abatement:
Partial or complete
cancellation by the IRS of taxes, penalties or
interest
owed by a taxpayer.
Adjustment: A change to your income tax liability (as you reported it in your tax return)
by an IRS auditor or Service Center.
Amended Tax Return: A tax return filed within three years to make one or more
changes to a previously filed return. (Done usually to get a refund).
Appeal: The IRS process allowing taxpayers to challenge IRS decisions.
Assess: The IRS process of recording a tax liability in a taxpayer’s account.
Asset: Any property you own that has monetary value.
Audit: An IRS review of a tax return. Also known as an “Examination”.
Auditor: An IRS Examination Division employee who reviews a tax return.
Automated Collection System (ACS): A computerized collection process in which IRS
collectors contact delinquent taxpayers by telephone or mail.
Bankruptcy: Federal law which can be used by taxpayers to eliminate their debts,
including tax debts (Chapter 7). Or taxpayer can create a payment plan over a 3−5 years
(Chapter 13).
Basis (Tax Basis): The cost of an asset which may be adjusted for tax reporting
purposes; downward by depreciation, or upward by improvements.
Certified Public Account (CPA): Most highly skilled individuals in the accounting
profession. CPAs are regulated by law and are allowed to practice before the IRS.
Claim for Refund: Taxpayers who have overpaid their taxes may file for a refund from
the IRS. Ask for Form 843. An amended tax return (Form 1040X) is also treated as a
claim for a refund.
Collection Division: The branch of the IRS that enforces collection of taxes.
Commissioner of Internal Revenue: The head of the whole IRS.
Correspondence Audit: An IRS examination conducted by mail.
Criminal Investigation Division (CID): The branch of the IRS that investigates
taxpayers to find out if they have committed tax crimes.
Deduction: An expense that the Internal Revenue Code allows taxpayers to subtract
from their income to reduce the amount on which they owe taxes.
Delinquent Return: A tax return filed late.
Depreciation: A tax deduction allowed for the wear−and−tear on an income producing
business or asset (such as a car for business or rental real estate).
Disallowance: An IRS finding at audit that finds a taxpayer was not entitled to a tax
benefit claimed on the tax return (usually a deduction or loss).
District Offices: Local IRS offices from where auditors, collectors, taxpayer service
representatives, criminal investigators, and Problems Resolution Officers operate.
Documentation: Any written proof which backs up an item on your tax return (usually
an expense claimed or a deduction).
Enrolled Agent (EA): A tax advisor and tax preparer allowed to practice before the IRS.
Examination: Official IRS terminology for an audit.
Exemption: The dollar amount that all taxpayers may subtract from their income on
their tax returns, corresponding to the number of people they support (including
themselves). Exemption also refers to the limited list of property that the IRS cannot
take it if levies your property to pay a tax debt.
Extension: Tax returns are due by April 15. An extension can be had until August 15. A
second extension can be had until October 15.
Failure to File a Return: Intentionally failing to file a return when obliged to do so. It is
a misdemeanor punishable by up to one year in jail and/or a fine of $25,000 for each year
not filed.
Field Audit: An examination that takes place outside the IRS offices (at your business,
home, or tax representative’s office).
Fifth Amendment: A well−known right guaranteed by the U.S. Constitution that
protects people from being forced by the government to incriminate themselves. You can
assert your Fifth Amendment right against the IRS by refusing to answer questions or
provide documents.
Filing: The act of mailing (or handing in) an income tax return.
Fraud: Any conduct meant to deceive the IRS, or cheat in the assessment or payment of
any taxes owed. A fraud can be civil (carrying a penalty of 75% of the taxes owed), or
criminal, such as tax evasion (carrying a maximum prison sentence of 5 years and a
maximum fine of $100,000), or false filing (carrying a maximum prison sentence of 3
years and a maximum fine of $100,000).
Freedom of Information Act: A federal law giving people the right to see U.S.
government documents, including their IRS files.
Gift: Transfer of property without any financial payment in return. A gift is not taxable
to the recipient, but may cause tax consequences for the giver (depending on the size of
the gift).
Gross Income: Income from all sources which taxpayers must report on their income tax
returns.
Group Manager: The immediate superior of an auditor or tax collector at an IRS
District Office.
Income: All earnings and other things of value you receive.
Independent Contractor: A self−employed worker for whom income taxes and Social
Security contributions are not withheld by the business for which the contractor performs
services.
Information Return: A report filed with the IRS showing money paid by, or to, a
taxpayer. The most common information returns are W−2 (wages) and Form 1099
(independent contractors and other income).
Installment Agreement (IA): An IRS monthly payment plan for past taxes.
Internal Revenue Code (IRC): Tax laws of the U.S. as enacted by Congress. Also
known as the “Tax Code”.
Internal Revenue kit (IRM): A series of handkits that state the guidelines for IRS
personnel. Most (but not all) of these handkits are public information.
Internal Revenue Service (IRS): The tax law administration branch of the U.S.
Treasury Department.
Jeopardy Assessment: A sped−up procedure by which the IRS determines tax liability
without first notifying the taxpayer. It is a rare procedure, and only brought into effect
when the IRS believes that the taxpayer is about to flee the country.
Joint Tax Return: An income tax return filed by a married couple.
Levy: An IRS seizure of a taxpayer’s property or wages to pay off an outstanding tax
debt.
Negligence: The careless disregard of tax laws when preparing a tax return. The IRS can
impose a penalty.
Non−Filer: A person who does not file a tax return when required to do so by law (when
you owe taxes).
Offer in Compromise (OIC): A formal proposal to the IRS to settle your tax account
balance for less than the amount the IRS says you owe. An OIC must be submitted on
IRS Form 656.
Office Audit: An IRS examination of your tax return by a tax auditor at a local IRS
office.
Payroll Taxes: Federal income tax and FICA contributions (which include Social
Security and Medicare) that a business must deposit regularly and report quarterly to the
IRS for each employee.
Penalties: Civil fines imposed on taxpayers who disobey tax laws.
Personal Property: Any item of property that is not real estate.
Petition: A written form filed with the U.S. Tax Court to challenge an IRS tax
assessment.
Problems Resolution Officer (PRO): An IRS trouble−shooter who acts for taxpayers
with problems not solved through normal IRS channels. PROs work in District Offices
and Service Centers.
Problems Resolution Program (PRP): An IRS section that helps taxpayers with
problems not solved to their satisfaction through normal IRS channels.
Protest: A written or oral request to appeal a decision within the IRS.
Real Property: Real estate, consisting of land and structures attached to it.
Reconsideration: A procedure that lets you reopen a closed audit or a previous tax
assessment.
Records: A collection of written proofs that show income, expenses and financial
transactions. Records are one form of Documentation.
Regular Tax Case: A Tax Court case in which a taxpayer contests $50,000 or more per
year.
Regulations: IRS written interpretations of selected Internal Revenue Code provisions.
Revenue Agent: An IRS employee who carries out a field audit.
Revenue Officer: A tax collector who works out of an IRS District Office.
Revenue Procedures: IRS interpretations of selected Internal Revenue Code provisions
that specify the procedures taxpayers must follow to comply with certain sections of the
Tax Code.
Revenue Rulings: IRS interpretations of selected Internal Revenue Code provisions that
apply to certain circumstances.
Self−Employed: Anyone who works for him− or herself, and not receiving wages from
an employer.
Service Centers: Ten regional IRS facilities where tax returns are filed and processed.
Most IRS notices come from Service Centers.
Small Tax Case: A Tax Court case in which a taxpayer contests less than $50,000 per
tax year. This is a simple, small claims court type proceeding, in which formal rules of
procedure and evidence do not apply.
Special Agent: An IRS officer who investigates suspected tax crimes.
Statute of Limitations: Differing time limits imposed by Congress on the IRS for
assessing and collecting taxes, on the Justice Department for charging taxpayers with
crimes, and on taxpayers for claiming refunds.
Summons: A legal order issued by the IRS forcing a taxpayer (or business) to appear or
provide financial information to the IRS.
Tax Attorney: A lawyer who does tax−related work including tax and estate planning,
IRS dispute resolution and tax return preparation. Such an attorney should have special
education, such as a tax law degree (LL.M.−Tax), or a certification as a tax law specialist
from a state bar association.
Tax Auditor: An IRS employee who conducts an office audit.
Tax Court: The only U.S. federal court where a taxpayer can challenge an IRS tax
assessment without first paying the taxes claimed due by the IRS.
Tax Law: The Internal Revenue Code written by Congress, along with the decisions of
all federal courts which interpret it.
Tax Lien: A claim on your property put by the IRS if you don’t pay your tax bill. Liens
go on public record and anyone can find out your financial position.
Tax Preparer: A person who fills in your tax return forms for a fee.
Tax Professional: Anyone working privately in the tax field, such as an accountant or
tax lawyer.
Tax Representative: A type of tax professional legally qualified to represent you before
the IRS.
Tax Return: A form that nearly all individuals, partnerships, and corporations are
required to file each year with the IRS, stating income, exemptions, credits and
deductions.
Taxable Income: The amount of income on which you must pay taxes each year. It’s
determined on your tax return by subtracting deductions and exemptions from your gross
income.
Taxpayer Account: An IRS computer record containing your taxpaying history. Your
tax account contains all tax assessments, penalties and interest, and credits of payment
for each tax year.
Taxpayer Advocate: The IRS trouble−shooter who acts for taxpayers in order to solve
IRS problems not fixed through normal IRS channels. The Taxpayer Advocate works
through the Problems Resolution Officers in IRS District Offices and Service Centers.
Taxpayer Assistance Order (TAO): An order that a Problems Resolution Officer can
issue to override an action taken by another division of the IRS.
Taxpayer Identification Number (TIN): A number assigned by the IRS for keeping
track of tax accounts. For individuals it is their Social Security Number (SSN). For
businesses it is a separate 13−dgit number called the Employer Identification Number
(EIN).
Taxpayers’ Bill of Rights (TBOR I and TBOR II): Federal laws imposing standards
and limits on the IRS, and establishing a taxpayer’s rights when dealing with the IRS.
Third Party: Any person or business other than the IRS or the taxpayer, who has
knowledge of a taxpayer’s finances (such as your bank, stockbroker, or employee).
Trust Fund Recovery Penalty: A tax law that gives the IRS the power to assess unpaid
payroll taxes against “responsible” persons involved in a business owing the taxes.
Waiver: Voluntarily giving up a legal right. Usually, the IRS requires waivers in
exchange for granting installment payment agreements.
Willful: Intentional conduct which violates the tax laws and can lead to criminal
prosecution.
100% Payroll Penalty: Same as Trust Fund Recovery Penalty.
30−Day Letter: IRS written notice following an audit, giving a taxpayer 30 days to
protest the audit by requesting an IRS appeals hearing.
90−Day Letter: The letter the IRS must sent if it wants to impose additional taxes
(usually after an audit). The letter gives a taxpayer 90 days to file a Petition in U.S. Tax
Court to challenge the additional taxes. If a challenge is not filed, the tax assessment
becomes final. Also known as a “Notice of Deficiency”.
owed by a taxpayer.
Adjustment: A change to your income tax liability (as you reported it in your tax return)
by an IRS auditor or Service Center.
Amended Tax Return: A tax return filed within three years to make one or more
changes to a previously filed return. (Done usually to get a refund).
Appeal: The IRS process allowing taxpayers to challenge IRS decisions.
Assess: The IRS process of recording a tax liability in a taxpayer’s account.
Asset: Any property you own that has monetary value.
Audit: An IRS review of a tax return. Also known as an “Examination”.
Auditor: An IRS Examination Division employee who reviews a tax return.
Automated Collection System (ACS): A computerized collection process in which IRS
collectors contact delinquent taxpayers by telephone or mail.
Bankruptcy: Federal law which can be used by taxpayers to eliminate their debts,
including tax debts (Chapter 7). Or taxpayer can create a payment plan over a 3−5 years
(Chapter 13).
Basis (Tax Basis): The cost of an asset which may be adjusted for tax reporting
purposes; downward by depreciation, or upward by improvements.
Certified Public Account (CPA): Most highly skilled individuals in the accounting
profession. CPAs are regulated by law and are allowed to practice before the IRS.
Claim for Refund: Taxpayers who have overpaid their taxes may file for a refund from
the IRS. Ask for Form 843. An amended tax return (Form 1040X) is also treated as a
claim for a refund.
Collection Division: The branch of the IRS that enforces collection of taxes.
Commissioner of Internal Revenue: The head of the whole IRS.
Correspondence Audit: An IRS examination conducted by mail.
Criminal Investigation Division (CID): The branch of the IRS that investigates
taxpayers to find out if they have committed tax crimes.
Deduction: An expense that the Internal Revenue Code allows taxpayers to subtract
from their income to reduce the amount on which they owe taxes.
Delinquent Return: A tax return filed late.
Depreciation: A tax deduction allowed for the wear−and−tear on an income producing
business or asset (such as a car for business or rental real estate).
Disallowance: An IRS finding at audit that finds a taxpayer was not entitled to a tax
benefit claimed on the tax return (usually a deduction or loss).
District Offices: Local IRS offices from where auditors, collectors, taxpayer service
representatives, criminal investigators, and Problems Resolution Officers operate.
Documentation: Any written proof which backs up an item on your tax return (usually
an expense claimed or a deduction).
Enrolled Agent (EA): A tax advisor and tax preparer allowed to practice before the IRS.
Examination: Official IRS terminology for an audit.
Exemption: The dollar amount that all taxpayers may subtract from their income on
their tax returns, corresponding to the number of people they support (including
themselves). Exemption also refers to the limited list of property that the IRS cannot
take it if levies your property to pay a tax debt.
Extension: Tax returns are due by April 15. An extension can be had until August 15. A
second extension can be had until October 15.
Failure to File a Return: Intentionally failing to file a return when obliged to do so. It is
a misdemeanor punishable by up to one year in jail and/or a fine of $25,000 for each year
not filed.
Field Audit: An examination that takes place outside the IRS offices (at your business,
home, or tax representative’s office).
Fifth Amendment: A well−known right guaranteed by the U.S. Constitution that
protects people from being forced by the government to incriminate themselves. You can
assert your Fifth Amendment right against the IRS by refusing to answer questions or
provide documents.
Filing: The act of mailing (or handing in) an income tax return.
Fraud: Any conduct meant to deceive the IRS, or cheat in the assessment or payment of
any taxes owed. A fraud can be civil (carrying a penalty of 75% of the taxes owed), or
criminal, such as tax evasion (carrying a maximum prison sentence of 5 years and a
maximum fine of $100,000), or false filing (carrying a maximum prison sentence of 3
years and a maximum fine of $100,000).
Freedom of Information Act: A federal law giving people the right to see U.S.
government documents, including their IRS files.
Gift: Transfer of property without any financial payment in return. A gift is not taxable
to the recipient, but may cause tax consequences for the giver (depending on the size of
the gift).
Gross Income: Income from all sources which taxpayers must report on their income tax
returns.
Group Manager: The immediate superior of an auditor or tax collector at an IRS
District Office.
Income: All earnings and other things of value you receive.
Independent Contractor: A self−employed worker for whom income taxes and Social
Security contributions are not withheld by the business for which the contractor performs
services.
Information Return: A report filed with the IRS showing money paid by, or to, a
taxpayer. The most common information returns are W−2 (wages) and Form 1099
(independent contractors and other income).
Installment Agreement (IA): An IRS monthly payment plan for past taxes.
Internal Revenue Code (IRC): Tax laws of the U.S. as enacted by Congress. Also
known as the “Tax Code”.
Internal Revenue kit (IRM): A series of handkits that state the guidelines for IRS
personnel. Most (but not all) of these handkits are public information.
Internal Revenue Service (IRS): The tax law administration branch of the U.S.
Treasury Department.
Jeopardy Assessment: A sped−up procedure by which the IRS determines tax liability
without first notifying the taxpayer. It is a rare procedure, and only brought into effect
when the IRS believes that the taxpayer is about to flee the country.
Joint Tax Return: An income tax return filed by a married couple.
Levy: An IRS seizure of a taxpayer’s property or wages to pay off an outstanding tax
debt.
Negligence: The careless disregard of tax laws when preparing a tax return. The IRS can
impose a penalty.
Non−Filer: A person who does not file a tax return when required to do so by law (when
you owe taxes).
Offer in Compromise (OIC): A formal proposal to the IRS to settle your tax account
balance for less than the amount the IRS says you owe. An OIC must be submitted on
IRS Form 656.
Office Audit: An IRS examination of your tax return by a tax auditor at a local IRS
office.
Payroll Taxes: Federal income tax and FICA contributions (which include Social
Security and Medicare) that a business must deposit regularly and report quarterly to the
IRS for each employee.
Penalties: Civil fines imposed on taxpayers who disobey tax laws.
Personal Property: Any item of property that is not real estate.
Petition: A written form filed with the U.S. Tax Court to challenge an IRS tax
assessment.
Problems Resolution Officer (PRO): An IRS trouble−shooter who acts for taxpayers
with problems not solved through normal IRS channels. PROs work in District Offices
and Service Centers.
Problems Resolution Program (PRP): An IRS section that helps taxpayers with
problems not solved to their satisfaction through normal IRS channels.
Protest: A written or oral request to appeal a decision within the IRS.
Real Property: Real estate, consisting of land and structures attached to it.
Reconsideration: A procedure that lets you reopen a closed audit or a previous tax
assessment.
Records: A collection of written proofs that show income, expenses and financial
transactions. Records are one form of Documentation.
Regular Tax Case: A Tax Court case in which a taxpayer contests $50,000 or more per
year.
Regulations: IRS written interpretations of selected Internal Revenue Code provisions.
Revenue Agent: An IRS employee who carries out a field audit.
Revenue Officer: A tax collector who works out of an IRS District Office.
Revenue Procedures: IRS interpretations of selected Internal Revenue Code provisions
that specify the procedures taxpayers must follow to comply with certain sections of the
Tax Code.
Revenue Rulings: IRS interpretations of selected Internal Revenue Code provisions that
apply to certain circumstances.
Self−Employed: Anyone who works for him− or herself, and not receiving wages from
an employer.
Service Centers: Ten regional IRS facilities where tax returns are filed and processed.
Most IRS notices come from Service Centers.
Small Tax Case: A Tax Court case in which a taxpayer contests less than $50,000 per
tax year. This is a simple, small claims court type proceeding, in which formal rules of
procedure and evidence do not apply.
Special Agent: An IRS officer who investigates suspected tax crimes.
Statute of Limitations: Differing time limits imposed by Congress on the IRS for
assessing and collecting taxes, on the Justice Department for charging taxpayers with
crimes, and on taxpayers for claiming refunds.
Summons: A legal order issued by the IRS forcing a taxpayer (or business) to appear or
provide financial information to the IRS.
Tax Attorney: A lawyer who does tax−related work including tax and estate planning,
IRS dispute resolution and tax return preparation. Such an attorney should have special
education, such as a tax law degree (LL.M.−Tax), or a certification as a tax law specialist
from a state bar association.
Tax Auditor: An IRS employee who conducts an office audit.
Tax Court: The only U.S. federal court where a taxpayer can challenge an IRS tax
assessment without first paying the taxes claimed due by the IRS.
Tax Law: The Internal Revenue Code written by Congress, along with the decisions of
all federal courts which interpret it.
Tax Lien: A claim on your property put by the IRS if you don’t pay your tax bill. Liens
go on public record and anyone can find out your financial position.
Tax Preparer: A person who fills in your tax return forms for a fee.
Tax Professional: Anyone working privately in the tax field, such as an accountant or
tax lawyer.
Tax Representative: A type of tax professional legally qualified to represent you before
the IRS.
Tax Return: A form that nearly all individuals, partnerships, and corporations are
required to file each year with the IRS, stating income, exemptions, credits and
deductions.
Taxable Income: The amount of income on which you must pay taxes each year. It’s
determined on your tax return by subtracting deductions and exemptions from your gross
income.
Taxpayer Account: An IRS computer record containing your taxpaying history. Your
tax account contains all tax assessments, penalties and interest, and credits of payment
for each tax year.
Taxpayer Advocate: The IRS trouble−shooter who acts for taxpayers in order to solve
IRS problems not fixed through normal IRS channels. The Taxpayer Advocate works
through the Problems Resolution Officers in IRS District Offices and Service Centers.
Taxpayer Assistance Order (TAO): An order that a Problems Resolution Officer can
issue to override an action taken by another division of the IRS.
Taxpayer Identification Number (TIN): A number assigned by the IRS for keeping
track of tax accounts. For individuals it is their Social Security Number (SSN). For
businesses it is a separate 13−dgit number called the Employer Identification Number
(EIN).
Taxpayers’ Bill of Rights (TBOR I and TBOR II): Federal laws imposing standards
and limits on the IRS, and establishing a taxpayer’s rights when dealing with the IRS.
Third Party: Any person or business other than the IRS or the taxpayer, who has
knowledge of a taxpayer’s finances (such as your bank, stockbroker, or employee).
Trust Fund Recovery Penalty: A tax law that gives the IRS the power to assess unpaid
payroll taxes against “responsible” persons involved in a business owing the taxes.
Waiver: Voluntarily giving up a legal right. Usually, the IRS requires waivers in
exchange for granting installment payment agreements.
Willful: Intentional conduct which violates the tax laws and can lead to criminal
prosecution.
100% Payroll Penalty: Same as Trust Fund Recovery Penalty.
30−Day Letter: IRS written notice following an audit, giving a taxpayer 30 days to
protest the audit by requesting an IRS appeals hearing.
90−Day Letter: The letter the IRS must sent if it wants to impose additional taxes
(usually after an audit). The letter gives a taxpayer 90 days to file a Petition in U.S. Tax
Court to challenge the additional taxes. If a challenge is not filed, the tax assessment
becomes final. Also known as a “Notice of Deficiency”.
Glossary
Form Object
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