IRS terms in plain English

A letter, such as Letter 525 or Letter 950, that comes with a report of changes the IRS proposes to your tax return. If you agree, you sign and return the agreement form. If you disagree, the letter explains how to file a protest within 30 days of its date to ask the Independent Office of Appeals to review the changes.

Source: Letters and notices offering an appeal opportunity, checked October 22, 2026

See also: Audit (examination), Independent Office of Appeals, Statutory notice of deficiency (90-day letter)

An abatement is the IRS reducing or removing tax, interest, penalties or fees it has charged to your account. You can ask for an abatement of certain amounts, often by filing Form 843.

Source: About Form 843, Claim for Refund and Request for Abatement, checked October 22, 2026

See also: First Time Abate (FTA), Reasonable cause, Math error

An assessment is the IRS officially recording a tax debt on your account, which the IRS describes as putting your balance due on the books. After it assesses the tax, the IRS sends a bill called a Notice and Demand for Payment.

Source: Understanding a federal tax lien, checked October 22, 2026

See also: Assessment statute of limitations, Collection Statute Expiration Date (CSED), Notice of Federal Tax Lien (NFTL)

The time limit set by law for the IRS to assess additional tax for a tax year. It is generally three years after the return was due or filed, whichever is later. Once it expires, the IRS can no longer assess additional tax for that year.

Source: IRS audits, checked October 22, 2026

See also: Assessment, Audit (examination), Collection Statute Expiration Date (CSED)

An audit is the IRS review of your books, records and tax return to check that your income and tax were reported correctly. The IRS conducts audits by mail or through an in-person interview, and it first contacts you by mail. It does not start an audit by telephone.

Source: IRS audits, checked October 22, 2026

See also: Correspondence audit, Office audit, Field audit, Revenue agent, 30-day letter

An IRS program that compares information returns, such as Forms W-2 and 1099 from employers and banks, with what you reported on your tax return. When the amounts do not match, the program can produce a notice such as a CP2000 proposing changes to your tax.

Source: IRM 4.19.3, IMF Automated Underreporter Program, checked October 22, 2026

See also: Math error, Audit (examination), Statutory notice of deficiency (90-day letter)

A levy that takes money from your bank account to pay a tax debt. Funds in the account are frozen when the bank receives the levy, and the law gives a 21-day waiting period before the bank must turn over the money, so you have time to contact the IRS to arrange payment or point out errors.

Source: Information about bank levies, checked October 22, 2026

See also: Levy, Levy release, Wage levy

An IRS appeal process for many collection actions, including liens, levies, seizures and rejected or ended installment agreements. It generally gives a quicker decision than a Collection Due Process hearing and covers more kinds of actions. You cannot dispute whether you owe the tax in CAP, and you cannot go to court if you disagree with the result.

Source: Publication 1660, Collection Appeal Rights, checked October 22, 2026

See also: Collection Due Process (CDP) hearing, Equivalent hearing, Independent Office of Appeals

A hearing with the IRS Independent Office of Appeals that you can request after certain lien or levy notices. It lets you discuss alternatives to enforced collection and, if you have not had an earlier chance, dispute the amount you owe. The lien or levy notice gives you a set time, generally 30 days, to request it.

Source: Collection due process (CDP) FAQs, checked October 22, 2026

See also: Equivalent hearing, Collection Appeals Program (CAP), Levy, Notice of Federal Tax Lien (NFTL), Independent Office of Appeals

The end of the time the IRS has to collect a tax debt, generally 10 years from the date the tax was assessed. Each assessment on your account has its own date. Events such as a pending installment agreement or offer, a bankruptcy or a Collection Due Process hearing can pause or extend the clock.

Source: Time IRS can collect tax, checked October 22, 2026

See also: Assessment, Installment agreement, Offer in compromise (OIC), Collection Due Process (CDP) hearing

An audit handled by mail. The IRS letter asks for more information about certain items on your return, such as income, expenses and itemized deductions. If you have too many records to mail, you can ask for a face-to-face audit.

Source: IRS audits, checked October 22, 2026

See also: Audit (examination), Office audit, Field audit

A status the IRS may give your account when you cannot pay because of financial hardship, which temporarily stops most collection activity. You still owe the full amount, and penalties and interest keep growing. The IRS may review your finances later, file a Notice of Federal Tax Lien and apply future refunds to the debt.

Source: Temporarily delay the collection process, checked October 22, 2026

See also: Installment agreement, Offer in compromise (OIC), Refund offset

A hearing with the IRS Independent Office of Appeals that you can request if you miss the deadline for a Collection Due Process hearing. It must be requested within the later time limits in Publication 1660. Unlike a timely CDP hearing, it does not stop levies or pause the collection clock, and you cannot go to court if you disagree with the result.

Source: Publication 1660, Collection Appeal Rights, checked October 22, 2026

See also: Collection Due Process (CDP) hearing, Collection Appeals Program (CAP), Independent Office of Appeals

A penalty for not paying enough tax during the year, through withholding or estimated tax payments, or for paying it late. Taxes are pay-as-you-go, so most tax must be paid as you earn income. This penalty generally cannot be removed for reasonable cause, though it may be reduced in limited situations such as a casualty, disaster or other unusual circumstance.

Source: Underpayment of estimated tax by individuals penalty, checked October 22, 2026

See also: Failure to pay penalty, Interest on unpaid tax, Reasonable cause

A penalty for not filing your tax return by the due date, including extensions. For individual income tax returns it is generally 5% of the unpaid tax for each month or part of a month the return is late, up to 25%. It does not apply if you can show the failure was due to reasonable cause.

Source: Failure to file penalty, checked October 22, 2026

See also: Failure to pay penalty, First Time Abate (FTA), Reasonable cause, Substitute for return (SFR)

A penalty for not paying the tax you owe by the due date. It is generally 0.5% of the unpaid tax for each month or part of a month it stays unpaid, up to 25%. The rate can be lower during an approved payment plan and higher if the tax is still unpaid 10 days after a notice of intent to levy.

Source: Failure to pay penalty, checked October 22, 2026

See also: Failure to file penalty, Interest on unpaid tax, First Time Abate (FTA), Installment agreement

A program run by the IRS with the Treasury’s Bureau of the Fiscal Service that collects overdue taxes by taking part of certain federal payments owed to you. These can include federal retirement annuities, payments to federal contractors and vendors, and certain Social Security benefits. The levy continues until the debt is paid or other arrangements are made.

Source: Federal Payment Levy Program, checked October 22, 2026

See also: Levy, Treasury Offset Program (TOP), Levy release

An in-person audit held at your home, your place of business or your accountant’s or representative’s office. You are first contacted by mail, and the letter gives contact information and instructions.

Source: IRS audits, checked October 22, 2026

See also: Audit (examination), Office audit, Correspondence audit, Revenue agent

An IRS administrative waiver that can remove failure to file, failure to pay and failure to deposit penalties for taxpayers with a history of timely compliance over the prior three years. Starting in summer 2026 the IRS is moving to a related relief called Automatic Exemption from Penalty, which applies without a request so the penalty is never assessed.

Source: Penalty relief due to First Time Abate or other administrative waiver, checked October 22, 2026

See also: Abatement, Reasonable cause, Failure to file penalty, Failure to pay penalty

A document filed as a tax return that lacks the information needed to judge whether the tax is correct, or shows on its face that the tax is substantially wrong, and that rests on an argument the IRS has listed as frivolous or is meant to delay tax administration. Filing one can lead to a separate penalty under section 6702 of the tax code.

Source: IRM 5.20.10, Identification and Processing of Frivolous Documents, checked October 22, 2026

See also: Assessment, Collection Due Process (CDP) hearing

A six-digit number, known only to you and the IRS, that stops someone else from filing a tax return with your Social Security number or ITIN. A new one is issued each year, and it must be entered on your return. The IRS will never ask you for your IP PIN.

Source: Get an identity protection PIN (IP PIN), checked October 22, 2026

See also: Identity verification letter

A letter, such as one in the CP5071 series or Letter 5447C, asking you to confirm your identity and whether you filed the tax return the IRS received. If you did not file, responding lets the IRS know someone may have used your information. The IRS processes the return after you verify it.

Source: Identity verification for IRS letter recipients, checked October 22, 2026

See also: Identity Protection PIN (IP PIN), Tax transcript

An office within the IRS that works to resolve tax disputes without going to court, in a way meant to be fair and impartial to both you and the government.

Source: IRS Independent Office of Appeals, checked October 22, 2026

See also: Collection Due Process (CDP) hearing, Collection Appeals Program (CAP), 30-day letter, Petition to the U.S. Tax Court

An agreement with the IRS to pay the taxes you owe over an extended time, usually in monthly payments. Penalties and interest keep adding up until the balance is paid in full, and a setup fee may apply. While a request is pending or a plan is in effect, the IRS generally does not levy.

Source: Payment plans; installment agreements, checked October 22, 2026

See also: Offer in compromise (OIC), Currently Not Collectible (CNC), Collection Statute Expiration Date (CSED), Levy

A charge the IRS adds when you do not pay tax, penalties or interest by the due date. It builds daily until the balance is paid in full, and the rate can change every quarter. Interest is not removed for reasonable cause, but it goes down automatically if the related tax or penalty is reduced.

Source: Interest, checked October 22, 2026

See also: Failure to pay penalty, Abatement, Installment agreement

A levy is the legal seizure of your property to pay a tax debt. It can take wages, bank accounts, retirement accounts and other property, or the IRS can seize and sell property such as a car or house. A levy is different from a lien, which is a legal claim against property rather than taking it.

Source: What is a levy?, checked October 22, 2026

See also: Wage levy, Bank levy, Federal Payment Levy Program (FPLP), Levy release, Collection Due Process (CDP) hearing, Notice of Federal Tax Lien (NFTL)

An IRS action that ends a levy. The IRS is required to release a levy in certain cases, such as when you pay what you owe, enter an installment agreement that does not allow the levy to continue, or the levy creates an economic hardship. A release does not erase the debt, so you still need to resolve the balance.

Source: How do I get a levy released?, checked October 22, 2026

See also: Levy, Wage levy, Bank levy, Collection Appeals Program (CAP)

A discharge removes the federal tax lien from a specific piece of property. Eligibility depends on several Internal Revenue Code provisions explained in Publication 783.

Source: Understanding a federal tax lien, checked October 22, 2026

See also: Notice of Federal Tax Lien (NFTL), Lien release, Lien subordination, Lien withdrawal

A release clears both the federal tax lien and the public Notice of Federal Tax Lien. The IRS releases a lien when the debt is fully paid, when payment is guaranteed by a bond, when you meet the terms of an accepted offer in compromise, or when the collection period ends.

Source: Publication 594, The IRS Collection Process (Rev. 1-2026), checked October 22, 2026

See also: Notice of Federal Tax Lien (NFTL), Lien withdrawal, Lien discharge, Collection Statute Expiration Date (CSED)

Subordination does not remove the federal tax lien. It lets another creditor move ahead of the IRS in line, which may make it easier to get a loan or mortgage. Eligibility is explained in Publication 784.

Source: Understanding a federal tax lien, checked October 22, 2026

See also: Notice of Federal Tax Lien (NFTL), Lien discharge, Lien withdrawal

A withdrawal removes the public Notice of Federal Tax Lien so the IRS is no longer competing with your other creditors. You still owe the tax. You can apply using Form 12277, and some taxpayers qualify after paying in full or after setting up a direct debit installment agreement.

Source: Understanding a federal tax lien, checked October 22, 2026

See also: Notice of Federal Tax Lien (NFTL), Lien release, Installment agreement

A mathematical or clerical mistake on a return, such as an addition error or entries that do not agree with each other, that the IRS can correct without first sending a notice of deficiency. The IRS sends a notice explaining the error. If you ask for the change to be reversed within 60 days after the notice is sent, the law requires the IRS to abate it.

Source: 26 U.S.C. 6213, Restrictions applicable to deficiencies; petition to Tax Court (U.S. Code, 2024 edition, GovInfo), checked October 22, 2026

See also: Abatement, Statutory notice of deficiency (90-day letter), Automated Underreporter (AUR)

A federal tax lien is the government’s legal claim against your property when you do not pay a tax debt after being billed. The Notice of Federal Tax Lien is the public document the IRS files to alert creditors to that claim. It can affect your ability to get credit.

Source: Understanding a federal tax lien, checked October 22, 2026

See also: Lien release, Lien withdrawal, Lien discharge, Lien subordination, Levy, Collection Due Process (CDP) hearing

An agreement that may let you settle your tax debt for less than the full amount if you cannot pay in full or paying would cause financial hardship. The IRS looks at your income, expenses and asset equity. It generally will not accept an offer if you could pay in full through a payment plan or your equity in assets.

Source: Offer in compromise, checked October 22, 2026

See also: Installment agreement, Currently Not Collectible (CNC), Collection Statute Expiration Date (CSED)

An in-person audit interview held at an IRS office. As with other audits, the IRS first contacts you by mail with instructions.

Source: IRS audits, checked October 22, 2026

See also: Audit (examination), Field audit, Correspondence audit

The court filing that starts a case in the United States Tax Court. You can file one after receiving certain IRS notices, such as a notice of deficiency or a notice of determination. Time limits are set by law, and the IRS normally lists the last day to file in a notice of deficiency.

Source: U.S. Tax Court, Starting a case, checked October 22, 2026

See also: Statutory notice of deficiency (90-day letter), Collection Due Process (CDP) hearing, Independent Office of Appeals

Form 2848 lets you authorize a person who is eligible to practice before the IRS to represent you. It also allows that person to receive and inspect your confidential tax information.

Source: About Form 2848, Power of Attorney and Declaration of Representative, checked October 22, 2026

See also: Taxpayer Advocate Service (TAS), Tax transcript

The law requires the IRS to assign certain overdue, inactive tax debts to private collection agencies. The IRS first sends Notice CP40 telling you the account was assigned, and the agency then sends its own letter.

Source: Private debt collection, checked October 22, 2026

See also: Revenue officer, Installment agreement

A basis for removing or reducing certain penalties when you acted with ordinary care and good faith but still could not file or pay on time, for example because of a serious illness or a death in the family. The IRS decides case by case. It does not apply to some penalties, such as the estimated tax penalty.

Source: Penalty relief for reasonable cause, checked October 22, 2026

See also: Abatement, First Time Abate (FTA), Failure to file penalty, Failure to pay penalty

When your tax refund is reduced to pay a debt. The IRS can apply your refund to federal taxes you owe for another year, and the Treasury’s Bureau of the Fiscal Service can reduce it to pay certain other debts such as child support. You get a notice explaining how the refund was applied.

Source: Topic no. 203, Reduced refund, checked October 22, 2026

See also: Treasury Offset Program (TOP), Currently Not Collectible (CNC)

An IRS civilian employee who conducts audits by reviewing financial records to verify what you reported. A revenue agent may meet you at an IRS office or visit your home, business or accountant’s office, and first contacts you by mail. Revenue agents carry an IRS pocket commission and an HSPD-12 card, which you can ask to see.

Source: How to know it’s the IRS, checked October 22, 2026

See also: Audit (examination), Field audit, Revenue officer

An IRS civilian employee who works to resolve unfiled returns and unpaid taxes as part of the collection process, and who explains your rights, options and the consequences. A revenue officer usually mails a letter or calls to set up a visit. Payments are made to the United States Treasury.

Source: How to know it’s the IRS, checked October 22, 2026

See also: Levy, Notice of Federal Tax Lien (NFTL), Revenue agent, Private debt collection

A large, legally enforceable unpaid federal tax debt, above a threshold the IRS adjusts each year for inflation, that the IRS must certify to the State Department. The State Department generally will not issue a passport after certification and may deny an application or revoke a current passport. Some debts are excluded, such as those being paid under an installment agreement or accepted offer in compromise.

Source: Revocation or denial of passport in cases of certain unpaid taxes, checked October 22, 2026

See also: Installment agreement, Offer in compromise (OIC), Currently Not Collectible (CNC), Notice of Federal Tax Lien (NFTL)

A formal IRS letter proposing additional tax and giving you the right to challenge it in the U.S. Tax Court before you pay. The law gives you 90 days after the notice is mailed to file a petition, or 150 days if the notice is addressed to you outside the United States. The notice shows the last day to file.

Source: Internal Revenue Code section 6213(a), checked October 22, 2026

See also: Petition to the U.S. Tax Court, 30-day letter, Substitute for return (SFR), Assessment

A tax return the IRS may prepare for you if you do not file. It may not give you credit for deductions and exemptions you are entitled to. It leads to a proposed assessment, and filing your own return is still generally in your best interest.

Source: Topic no. 153, What to do if you haven’t filed your tax return, checked October 22, 2026

See also: Statutory notice of deficiency (90-day letter), Failure to file penalty, Assessment

An IRS record summarizing your tax information, such as a past return, your account activity, or the wage and income information others reported to the IRS. You can get transcripts through your IRS online account or by mail. Transcripts partly hide personal details to protect you, while financial figures stay visible.

Source: Get your tax records and transcripts, checked October 22, 2026

See also: Collection Statute Expiration Date (CSED), Power of attorney (Form 2848)

An independent organization within the IRS that helps taxpayers resolve problems with the IRS, free of charge. It can help if a tax problem is causing financial difficulty, you face an immediate threat of adverse action, or the IRS has not responded when it said it would. It also works to make sure you are treated fairly and understand your rights.

Source: Topic no. 104, Taxpayer Advocate Service: Your voice at the IRS, checked October 22, 2026

See also: Independent Office of Appeals, Power of attorney (Form 2848)

A program of the Treasury’s Bureau of the Fiscal Service that collects past-due debts people owe to state and federal agencies. It matches people who owe those debts with federal payments they are due, such as a tax refund, and withholds money to pay the debt where the law allows.

Source: Treasury Offset Program, Bureau of the Fiscal Service, checked October 22, 2026

See also: Refund offset, Federal Payment Levy Program (FPLP)

A penalty the IRS can assess personally against people responsible for a business’s unpaid withheld income and employment taxes or collected excise taxes. It applies to a responsible person who willfully failed to collect or pay those taxes. The penalty equals the unpaid trust fund tax, and the IRS can then collect it from that person’s own assets.

Source: Employment taxes and the Trust Fund Recovery Penalty (TFRP), checked October 22, 2026

See also: Levy, Notice of Federal Tax Lien (NFTL), Independent Office of Appeals

A levy sent to your employer that takes part of your pay each pay period until the debt is paid, other arrangements are made or the levy is released. Part of your wages is exempt and still paid to you. The exempt amount depends on your standard deduction and the number of dependents.

Source: Information about wage levies, checked October 22, 2026

See also: Levy, Levy release, Bank levy