Terms are listed alphabetically. Use Ctrl+F / Cmd+F to search this page for a specific term.
- ASED (Assessment Statute Expiration Date)
- The deadline by which the IRS must formally assess a tax liability — generally 3 years from the date a return was filed. After the ASED, the IRS cannot assess additional tax for that year. Note: fraudulent returns and substantial understatements (>25%) have extended ASEDs.
- Assessment
- The formal process by which the IRS records a tax liability on your account. Until a tax is 'assessed,' the IRS cannot begin the 10-year collection statute. An assessment is created when you file a return showing a balance due, when the IRS issues a deficiency notice and the time to petition Tax Court expires, or when the IRS processes a substitute for return (SFR).
- CDP (Collection Due Process)
- A formal right granted to taxpayers before the IRS can levy property. Triggered by an LT11 or Letter 1058 (Final Notice of Intent to Levy). You have 30 days to request a CDP hearing with the IRS Office of Appeals, which pauses all levy action during the review.
- CNC (Currently Not Collectible)
- A formal IRS designation indicating that a taxpayer cannot currently afford to pay their tax debt based on income and allowable living expenses. All collection activity is suspended while in CNC status. No payments are required, but interest and penalties continue to accrue.
- CSED (Collection Statute Expiration Date)
- The date 10 years after assessment on which the IRS's right to collect a tax debt expires permanently. After the CSED, the balance is removed from the taxpayer's account. The CSED can be tolled (paused) by events like an OIC submission, bankruptcy, or time spent outside the United States.
- DATC (Doubt as to Collectibility)
- One of three Offer in Compromise bases. The taxpayer cannot pay the full amount owed before the CSED expires. This is the most common OIC basis. Approval requires showing that your Reasonable Collection Potential (RCP) is lower than the total balance owed.
- DATL (Doubt as to Liability)
- An OIC basis where the taxpayer disputes whether the assessed tax is legally correct — arguing the IRS made an error in assessing the liability. Unlike DATC, DATL does not require a financial hardship analysis.
- DDIA (Direct Debit Installment Agreement)
- An installment agreement where payments are automatically withdrawn from a bank account monthly. The IRS requires DDIAs for certain installment agreement types (including payroll tax installment plans) and offers lower setup fees. DDIAs also qualify for lien withdrawal under the Fresh Start program for balances ≤$25,000.
- ETA (Effective Tax Administration)
- A third Offer in Compromise basis — available when the taxpayer can technically pay the full amount but doing so would create an economic hardship or be fundamentally inequitable. Rare but powerful in the right circumstances.
- FTA (First-Time Abatement)
- An IRS administrative policy that removes penalties from a taxpayer's first year of non-compliance, provided they had a clean 3-year penalty history before the violation. One of the most underutilized penalty relief mechanisms — can often be granted by phone in a single call.
- IMFOLI (Individual Master File — Literal)
- An IRS transcript type that shows account-level summary data: assessment dates, balances, transaction codes, and CSED. TaxWave pulls this transcript to build a complete picture of your tax situation.
- Installment Agreement (IA)
- A formal payment plan with the IRS. Types include: Guaranteed (≤$10k, full pay within 3 years), Streamlined (≤$100k, within 84 months, minimal documentation), Non-Streamlined (complex financials, requires Form 433), and Partial Pay (PPIA — payments don't cover full balance by CSED).
- NFTL (Notice of Federal Tax Lien)
- A public document that the IRS files with county or state authorities to establish its claim on your property — real and personal — as security for a tax debt. The NFTL is what appears in public records and affects your ability to sell property or obtain credit. Distinct from a tax lien itself (which arises automatically with an unpaid assessment) — the NFTL is the public filing of that lien.
- OIC (Offer in Compromise)
- A program allowing taxpayers to settle their tax debt for less than the full amount owed. The IRS evaluates the offer against the taxpayer's Reasonable Collection Potential. About 30–40% of submitted OICs are accepted. Filed on Form 656.
- PPIA (Partial Pay Installment Agreement)
- An installment agreement where the monthly payments are set at what the taxpayer can realistically afford — even if the total payments won't cover the full balance before the CSED expires. The unpaid portion is effectively forgiven when the CSED passes. A useful alternative to an OIC when OIC qualification is uncertain.
- Power of Attorney (Form 2848)
- An authorization allowing a tax professional to represent you before the IRS, access your transcripts, and negotiate on your behalf. Once filed, the IRS communicates directly with your representative instead of you. Does not grant any financial authority over your accounts.
- RCP (Reasonable Collection Potential)
- The IRS's calculation of what it could collect from a taxpayer — the foundation of every OIC evaluation. RCP equals: (net equity in assets) + (future income × multiplier). If your RCP is below your total balance, you qualify for a DATC OIC. Calculated using Form 433-A (OIC) data.
- SFR (Substitute for Return)
- A return the IRS prepares on a taxpayer's behalf when no return is filed. The IRS uses W-2, 1099, and other third-party income data. SFRs are filed with single filing status, standard deduction only, and no deductions, credits, or offsets the taxpayer would be entitled to — almost always overstating the actual liability. Filing your own return replaces the SFR and typically reduces the balance significantly.
- Statute of Limitations (Assessment)
- The IRS generally has 3 years from the return filing date to assess additional taxes. Extended to 6 years if gross income was understated by more than 25%. No limit for fraudulent returns or years where no return was filed.
- TFRP (Trust Fund Recovery Penalty)
- A 100% penalty under IRC §6672 assessed personally against 'responsible persons' who 'willfully' failed to collect or remit payroll taxes (employee withholdings). The TFRP can be assessed against multiple individuals simultaneously. Not dischargeable in bankruptcy.
- TXMODA (Tax Module Data)
- An IRS transcript type showing detailed transaction history for a specific tax year and module — every payment, assessment, penalty, interest calculation, and notice issued. TaxWave uses this to reconstruct the history of a tax account and identify errors or opportunities.
- Wage Garnishment (IRS)
- An IRS enforcement action that requires your employer to withhold a portion of your paycheck and remit it to the IRS. Unlike commercial creditors, the IRS does not need a court order to garnish wages — it only needs to complete the notice sequence and issue a Final Notice of Intent to Levy. The IRS's exempt amount (what you keep) is calculated using a table based on filing status and dependents; the remainder is taken.