20 Factor Test - To aid in determining whether an individual is an employee under the common law rules, the IRS uses twenty factors or elements to indicate whether sufficient control is present to establish an employer-employee relationship
Accountable Plan - Employee reimbursements or other expense allowance arrangement that satisfies three basic requirements: a business connection, substantiation, and return of excess amounts paid
Abate - To reduce or remove an amount (like penalties) imposed on a taxpayer
Accuracy-Related Penalty - Equal to 20% of an underpayment of tax from certain behaviors (negligence, disregard of rules, substantial understatement and valuation errors) and usually a result of an examination.
Accurint - Resource the IRS can use to identify aliases, related business entities, UCC filings, properties, judgments, and vehicle registrations to see if they are reporting accurate information on financial statements and help identify discrepancies
Affiliated group - Two or more corporations or companies related through common ownership, but are treated as one for federal income tax purposes. Often they consist of a parent corporation and one or more subsidiary corporations.
Agent - An accountant that works for the Internal Revenue Service, or state or local government agencies.
Allowable Living Expenses - Standards that include expenses that meet the necessary expense test. The necessary expense test is defined as expenses that are necessary to provide for a taxpayer’s (and his or her family's) health and welfare and/or production of income.
Amended Return - A return filed in order to make corrections to a tax return previously filed
Analysis - A detailed examination of specific information, like reviewing tax transcripts.
Appeal - The right a taxpayer may have to have their case heard in the appeals division of the IRS. There is usually a stringent time frame in order to qualify for this remedy in most cases, and the taxpayer would need to apply since it is not automatic.
Application Fee - A fee charged with various requests in order to be considered. The application fee for an Offer In Compromise is currently $186
Assessed - To set or determine an amount of tax, penalty, interest or fine, etc.
Asset Equity Table (AET) - Refers to the total net realizable value calculation of all assets of a taxpayer when considering the RCP (Reasonable Collection Potential) that is calculated when considering an Offer in Compromise (OIC)
Audit / Audited - To conduct an examination of a taxpayer's records in comparison to what was reported on a tax return
Audit Reconsideration - An audit reconsideration is the process the IRS uses to reevaluate the results of a prior audit where additional tax was assessed and remains unpaid, or a tax credit was reversed
Authorization - Permission granted to access a resource
Authorized Person - Someone approved or assigned by the employer to perform a specific type of duty or duties or to be at a specific location or locations
Automated Collection Service (ACS) - IRS collections computerized inventory system that sends taxpayers notices demanding payment, issues liens and levies, answers telephone calls to resolve delinquencies and balances due, offsets refunds, and passes cases to other divisions
Backup Withholding - Required withholding and remittance of tax to the IRS from income to be paid to individual or business that does not supply a proper Tax Identification Number, an investor, or foreign entity
Bankruptcy - A legal proceeding filed by individuals or businesses that are unable to pay off their outstanding debts
Behavioral Control - Refers to the facts that show whether there is a right to direct or control how the worker does the work, based on the 20 factor test the IRS uses for worker classification
Circular 230 Practitioner - An Enrolled Agent, CPA, or Attorney that is able to represent a client in matters before the IRS, or any other practitioner covered under the rules of Circular 230.
Civil Penalty - A financial penalty imposed by the IRS or state agency as restitution for wrongdoing (usually defined by legislation or regulations)
Click Rate - The percentage of people that access a hypertext link to a particular website from an email attachment or embedded link
Client Portal - Secure electronic gateway to a collection of digital files, services, and information, accessible over the Internet through a web browser to share information with a client
Cloud-based - Refers to applications, services or resources made available to users on demand via the Internet from a cloud computing provider's servers
Code 161 - Transcript code referring to reduced or removed Failure to File penalties
Code 166 - Transcript code referring to Failure to File Penalties assessed
Code 197 - Transcript code referring to reduced or removed Interest
Code 271 - Transcript code referring to reduced or removed Failure to Pay penalties
Code 276 - Transcript code referring to Failure to Pay Penalties assessed
Collateral Agreement - An agreement specific to an Offer in Compromise which adds additional terms to the offer when it is believed there will be significant future income of benefit, and the agreement allows the IRS to recoup some of this future benefit
Collectibility (Or Collectability) - The extent to which a taxpayer has the financial means to pay a debt with their assets and available income
Collection Financial Standards - Used to help determine a taxpayer's ability to pay a delinquent tax liability, and which define allowable living expenses based off of census bureau data, which can be National, Regional, or Locally based, depending on the category of expense
Collection Related Penalty - Penalty assessed on a taxpayer that relate to the collection of tax (or specifically the failure to pay or file taxes properly)
Common law - Law that is derived from custom and judicial precedent rather than statutes.
Compliance - Requirement that a taxpayer is in good standing with the IRS with filing or payment of tax obligations for current periods of time.
Compromise - When a taxpayer settles for less than the full amount owed, this is known as 'compromising' the tax
Congregation - A gathering or group of people assembled for religious worship. This also refers to the organization of churches and each church that could be part of a larger church group
Consistency - Conformity in the application of something, typically for the sake of logic, accuracy, or fairness, or a pattern of behavior that steadfastly adheres to the same principles, course or application of a rule or understanding.
Corporate Director - A member of the corporation's board of directors. The board generally takes responsibility for the business affairs of the corporation, but a director does not usually make decisions for the corporation on their own.
Corporate Officer - High level management official of a corporation or an unincorporated business, hired by the board of directors or the owner of a business. Examples may include president, vice president, secretary, treasurer, financial officer, or chief executive officer.
CP2100 Notice - Also known as a "B Notice", is sent by the IRS when a Tax ID number and name does not match. It requires verification of the information or backup withholding to begin on the taxpayer
Credit Bureau Report - External records the IRS can access to identify past residences and employers, verify competing lien holders, balances due and payment history to see if the taxpayer is reporting accurate information on financial statements and help identify discrepancies
Currently Non Collectible (CNC) - A status that puts a stop to collection activity when it is determined a taxpayer has financial hardship. No payments are required, although penalty and interest will still accrue, and collectibility will be reviewed periodically, but does not toll SOL.
Cybercrime - Criminal activities carried out by means of computers or the Internet
Cybercriminal - An individual who commits crimes, where he/she makes use of the computer either as a tool or as a target or as both
Cybersecurity - The measures taken to achieve protection against the criminal or unauthorized use of electronic data
Data Breach - A security incident in which sensitive, protected or confidential data is copied, transmitted, viewed, stolen or used by an individual unauthorized to do so
Data Security - Protective digital privacy measures applied to prevent unauthorized access to computers, databases and websites as well as protecting data from loss or corruption
DATC (Doubt as to Collectibility) - Offer in compromise requested on form 656 where the taxpayer is arguing that they do not have the ability to pay the tax in full and are offering a compromise to settle the debt for less than they owe based on the total of their assets and income.
DATL (Doubt as to Liability) - Offer in compromise requested on form 656-L where the taxpayer is arguing that the liability assessed is incorrect
Deason Rule - When receiving tax-free housing allowance, requires that all expenses must be allocated (and reduced) for income tax purposes by the percentage of tax-free allowance compared to total income, but does not affect the calculation for S/E purposes
Delegated - Entrust a task or responsibility to another person, like filing or payment of tax returns
De Minimis - Too trivial or minor to merit consideration, specifically less than 10 information returns or .5% of the total number of returns required to be filed for that year
Department of Labor (DOL) (USDOL) - A cabinet-level department of the federal government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, reemployment services, and some economic statistics. Many states also have DOL departments
Department of Justice (DOJ) - A department of the federal executive branch, headed by the attorney general, which administers the Federal Bureau of Investigation (FBI), prosecutes violations of federal law, and is responsible for enforcing all civil rights legislation
Deposit - Tax payment, usually referring to payments made from a business for employment taxes owing.
Discretionary Expenditures - A cost that is not essential for the operation of a home or business, and not considered necessary
Dissipated Assets - A dissipated asset is defined as “any asset (liquid or not liquid) that has been sold, transferred, or spent on non-priority items and/or debts and is no longer available to pay the tax liability.” Dean v. Comm'r, T.C. Memo 2009-269 (T.C. 2009)
Domestic Worker - A person paid to help with menial tasks such as cleaning. Often they work for private households as housekeepers, nannies, home nurses, among others.
Due Date - The date that a return or payment is due
Duly ordained - In accordance with the ceremonial, ritual, or discipline of a church or religious order to preach and teach the doctrines and administer the rites and ceremonies in public worship
E-File Provider - A business or organization authorized by the IRS to participate in IRS e-file. Providers may also be tax return preparers, but the activities and responsibilities for IRS e-file and return preparation are distinct and different from each other
E-Services - Web-based tools that allow tax professionals and taxpayers to complete certain transactions online. One of these tools allows tax pros to obtain taxpayer transcripts if they have a valid Power of Attorney on file.
Economic Hardship - A difficulty caused by having too little money or resources to be able to meet basic living expenses
EFT (Electronic Funds Transfer) - A transfer of funds from a taxpayer's account to the IRS or state agency for payment of a tax obligation
EFTPS (Electronic Funds Tax Payment System) - A service provided by the IRS that allows taxpayers to make tax payments either by telephone or online
Electronic Data - Information that could be stored in electronic format on a business computer or device and can contain a person's private information
Eligible - Meeting the requirements set or satisfying the appropriate conditions to allow a certain action
Email Security - Measures used to secure the access and content of an email account or service and which allows an individual or organization to protect the overall access to one or more email addresses or accounts
Employee - A person regularly employed for wages or salary for one employer who controls the details of their work performance
Employee Misclassification - The practice of labeling workers as independent contractors rather than employees, which allows employers to avoid paying unemployment and other taxes, and covering them on workers compensation.
Employee Share - Referring to the portion of taxes that are to be paid by a business that are deducted from the gross pay prior to the employee receiving it, and to be paid to the IRS, so it represents the employee portion but it is deducted up front.
Employer Share - Referring to the portion of taxes that are to be paid by a business that are contributed solely from the business and not deducted from the employee's wages, so it represents the employer portion, that is to be paid
Employment Agreement - A formal agreement that specifies the conditions of the relationship between an employee and employer including compensation and expectations. Also referred to as employment contracts, often executed for a specified period of time
Employment Tax - Taxes imposed on the employer and employee, which could consist of amounts withheld from the employee check as well as amounts the employer must match or contribute
Encrypts / Encryption - The process of converting information or data into a code, which requires a key to unlock it
ERISA - Employee Retirement Income Security Act of 1974, which is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.
Erroneous - Wrong or incorrect
ESBA - Employee Benefits Secuity Administration which was formerly the Pension and Welfare Benefits Administration. It is an agency of the US Department of Labor responsible for administering, regulating, and enforcing the provisions of ERISA
Estimated Tax Payments - Estimated tax is a method of paying tax on income that is not subject to withholding tax, usually quarterly with 4 equal installments. This can include income from self-employment, business earnings, interest, rent, dividends and other sources
Estimated Tax Penalty - Penalty imposed for failure to pay estimated tax payments as required by the IRS equal to the current interest rate (Short term Federal rate plus 3%)
ETA (Effective Tax Administration) - A form of OIC (Offer in Compromise) where a taxpayer argues on form 656 that they may have the ability to pay but there are special circumstances that should be considered in order to allow the taxpayer to settle the debt in full for less than they owe.
Exempt Assets - Specific assets that are 'exempt from levy', which means the values for specific assets are not required to be considered for Offer in Compromise calculations if under specific thresholds indexed for inflation annually
Extension to File - A request filed by the due date of a return to ask for more time to file (usually six months more). However, an extension to file does not allow an extension of time to pay, which is still considered due by the original due date.
Extension of Time to Pay - A special request made with Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship)
Facility Safeguards - Controls and measures meant to safeguard the location that sensitive information is kept
Facts and Circumstances - Consideration of a particular set of events and facts to determine if they are common and ordinary or unusual and uncommon in nature
Failure to Deposit Penalty (FTD) - Penalty imposed for failure to make proper or timely deposits (payments) in the correct amount or manner, and based on how many days past the due date it is received
Failure to Pay Penalty (FTP) - Penalty imposed if full amount of tax liability is not paid by the original due date
Failure to File Penalty (FTF) - Penalty imposed for failure to file a required return by the due date (including extensions)
Fair Market Value (FMV) - The price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.
FBAR (Foreign Bank Account Report) - The Report of Foreign Bank and Financial Accounts is commonly referred to as the foreign bank account report or FBAR. The FBAR was devised as part of the Bank Secrecy Act of 1970 as a means to discourage and prevent tax evasion
Federal Tax Deposit (FTD) - A payment to the IRS for FICA and Income tax withholding by the employer, or for other federal taxes withheld. These payments can occur on a semi-weekly, monthly, or annual cycle and are known as deposits
FFRF - Freedom From Religion Foundation
FICA (Federal Insurance Contributions Act) - Requirement for 6.2% of Social Security and 1.45% of Medicare tax to be withheld from employee wages and matched by the employer. Authority granted from IRC §3101-3128
Financial Control - Refers to facts that show whether or not the business has the right to control the economic aspects of the worker's job as part of the 20 factor test the IRS uses for worker classification
Financial Information - Information supplied to the IRS on forms 433-A, 433-F, 433-B or 433-A(OIC), 433-B(OIC) to provide assets, liabilities, income, and expenses to show how a taxpayer can satisfy an outstanding tax liability
Filing Information Returns Electronically (FIRE) - Electronic filing system with the IRS that allows information returns, extensions, and other documents to be filed electronically. Form 4419 can be used to apply for this system
Firewall - A part of a computer system or network that is designed to block unauthorized access while permitting outward communication
First Time Abatement (FTA) - A penalty waiver that allows a first-time noncompliant taxpayer to request abatement of certain penalties for a single tax period if they qualify
Form 1042-S - IRS form number for Foreign Person's U.S. Source Income Subject to Withholding, and used to report backup withholding for a foreign individual or entity
Form 1042-T - IRS form number for Annual Summary and Transmittal of Forms 1042-S, and used as a summary page that is to accompany the 1042-S forms when filing with the IRS
Form 1096 - IRS form number for Annual Summary and Transmittal of U.S. Information Returns, which is a summary page that is to accompany each type of information return filing with the IRS
Form 1099-A - IRS form number for information reporting for Acquisition or Abandonment of Secured Property
Form 1099-B - IRS form number for Proceeds From Broker and Barter Exchange Transactions, which is used for income information reporting to the IRS commonly from regulated investments
Form 1099-C - IRS form number for Cancellation of Debt, which is used for income information reporting to the IRS for cancellation of debt income
Form 1099-CAP - IRS form number for information reporting for Changes in Corporate Control and Capital Structure
Form 1099-DIV - IRS form number for Dividends and Distributions, which is used for income information reporting to the IRS for dividends or distributions received from an investment or stock
Form 1099-G - IRS form number for information reporting for Certain Government Payments
Form 1099-H - IRS form number for Health Coverage Tax Credit (HCTC) Advance Payments, which is used for income information reporting to the IRS for advance payments received for the Health Care Tax Credit
Form 1099-INT - IRS form number for information reporting for Interest Income
Form 1099-K - IRS form number for Payment Card and Third Party Network Transactions, which is used for information reporting to the IRS primarily for credit and debit card transactions received by a business for the year
Form 1099-LTC - IRS form number for information reporting for Long Term Care and Accelerated Death Benefit
Form 1099-MISC - IRS form number for information reporting for a variety of Miscellaneous Income types
Form 1099-OID - IRS form number for information reporting for Original Issue Discount items
Form 1099-PATR - IRS form number for information reporting for Taxable Distributions Received From Cooperatives
Form 1099-Q - IRS form number for information reporting for Payments From Qualified Education Programs (Under Section 529 and 530)
Form 1099-QA - IRS form number for information reporting for Distributions From ABLE Accounts
Form 1099-R - IRS form number for information reporting for Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
Form 1099-S - IRS form number for information reporting for Proceeds from Real Estate Transactions
Form 1099-SA - IRS form number for information reporting for Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
Form 1127 - IRS form number for Application for Extension of Time for Payment of Tax Due to Undue Hardship, which refers to the inability to pay a tax liability without causing undue hardship
Form 13711 - IRS form number for Request for Appeal of Offer in Compromise, providing administrative appeal if an Offer In Compromise is rejected by the IRS
Form 2848 - IRS form number for Power of Attorney, which provides the authority to act as the representative for a taxpayer in tax matters before the IRS
Form 433-A - IRS form number for Collection Information Statement for Wage Earners and Self-Employed, providing financial information necessary for determining how a taxpayer can satisfy an outstanding tax liability
Form 433-A(OIC) - IRS form number for Collection Information Statement for Wage Earners and Self-Employed, in a version to accompany the Form 656 to request an OIC, and provides financial information necessary for consideration of an Offer in Compromise
Form 433-B - IRS form number for Collection Information Statement for Businesses, providing financial information necessary on a business entity for determining how a taxpayer can satisfy an outstanding tax liability
Form 433-B(OIC) - IRS form number for Collection Information Statement for Businesses, in a version to accompany the Form 656 to request an OIC, and provides financial information necessary on a business entity for consideration of an Offer in Compromise
Form 433-F - IRS form number for Collection Information Statement, providing financial information necessary for determining how a taxpayer can satisfy an outstanding tax liability, but without as much information required as a 433-A or 433-A(OIC)
Form 4361 - IRS form number for Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners
Form 4419 - IRS form number for Application for Filing Information Returns Electronically (FIRE), which is used to apply to use the FIRE system to file information returns electronically
Form 656 - IRS form number for Offer in Compromise (Doubt as to Collectibility), which provides a taxpayer the ability to present evidence why they believe they cannot pay their tax liability and enter into an agreement with the IRS to settle this amount for less
Form 656L - IRS form number for Offer in Compromise (Doubt as to Liability), which provides a taxpayer the ability to present evidence why they believe the amount assessed is incorrect and why they doubt that they owe
Form 8821 - IRS form number for Tax Information Authorization, which allows anyone designated to inspect or receive confidential information verbally or in writing, like a transcript, but does not allow them to represent a taxpayer
Form 843 - IRS form number for Claim for Refund and Request for Abatement, which allows a taxpayer to claim a refund or request an abatement of certain taxes, interest, penalties, fees, and additions to tax
Form 8508 - IRS form number for Request for Waiver From Filing Information Returns Electronically, which allows a request to waive the electronic filing requirement for reasons of hardship and special circumstances
Form 8809 - IRS form number for Application for Extension of Time To File Information Returns, which allows an extension of 30 days for filing information returns, or an additional 30 days for hardship or special circumstances
Form 940 - Annual form to report federal unemployment. Form is due the last day of the month following the end of the year
Form 941 - Quarterly form to report social security, medicare, and income tax withheld from employee wages along with the employer's matching share of social security and medicare tax. Form is due the last day of the month following the end of the quarter.
Form 944 - Annual form to report social security, medicare and income tax withheld from employee wages along with the employer's matching share of social security and medicare tax. Form is due the last day of the month following the end of the year.
Form 945 - Annual form to report income tax withheld from non-payroll payments. Form is due the last day of the month following the end of the year.
Form Letter - A standardized letter to deal with frequently occurring matters
Form W-8BEN - IRS form number for Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), used by a foreign person to request exemption from withholding or at a reduced withholding rate
Form W-9 - IRS form number for Request for Taxpayer Identification Number and Certification that can be used to request a Tax ID number from an individual or entity
Fraudulent - Inaccurate or false
Fresh Start Program - An IRS program expanded in 2012 to help a greater number of financially-distressed taxpayers resolve their tax problems more quickly than in the past and reduce the number of tax liens issued.
Fringe benefits - An extra benefit supplementing an employee's salary such as a company car, holiday pay or other benefits determined by the employer
FUTA (Federal Unemployment Tax Act) - Unemployment contributions required by an employer based on a percentage of gross earnings. Authority granted from IRC §3301-3311
Good Faith Effort - What a reasonable person would consider as a diligent and honest effort if faced with the same set of facts and circumstances.
Hacker - A person who uses computers to gain unauthorized access to data
Hard Copy - A printed version on paper of data held in a computer or client information that only exists in paper format
Hardware - The collection of physical parts of a computer system or network. This includes the case, monitor, keyboard, mouse, the parts inside the case, like a hard drive, motherboard, video card, and others as well as the parts that comprise the entire network
Hardware Security - A physical computing device that safeguards computer devices often in the form of a plug-in card or an external device that attaches directly to a computer or network server
Hazards of Litigation - The Internal Revenue Service determination of the probability that the Internal Revenue Service position might not be upheld by a court, which can often result in a more favorable determination for the taxpayer due to this perceived risk
Housing Allowance - An amount of money in compensation for basic living expenses for employment situations, which are not taxable for income tax purposes, but are subject to taxation under self-employment rules
ID Theft (Identity Theft) - The fraudulent acquisition and use of a person's private identifying information, usually for financial gain
Ignorance - Lack of knowledge or information that relates to believing there is not any security risk in a firm
Incident Response Plan (IRP) - A set of written instructions for detecting, responding to and limiting the effects of an information security event
Inconsequential Error - An error that does not prevent the IRS from processing an information return since they are still able to correlate the information
Income Equity Table (IET) - Refers to the total value of income less allowable expenses of a taxpayer when considering the RCP (Reasonable Collection Potential) that is calculated when considering an Offer in Compromise (OIC)
Income Tax Withholding (ITW) - Income tax withholding deducted from gross earnings and paid to the IRS. Authority from IRC §3401-3406
Independent contractor - A person or business which performs services for another under a contract between them, with the terms spelled out such as duties, pay, the amount and type of work and other matters, but is not subject to another's control
Information Reporting - Any person or entity engaged in a trade or business, who makes reportable transactions during the calendar year must file information with the IRS to report those transactions, known as an information return
Information Return - A tax document used to report information to the IRS, such as W-2 forms, 1099's, or a variety of other documents.
Information Security Incident (IRS Definition) - Adverse event or threat that could result in misuse or destruction of taxpayer information or prevent the ability for a taxpayer to prepare or file a return
Innocent Spouse Relief - Three types of possible relief for spouses or former who filed joint income tax returns and are both liable for the tax, referred to as joint and several liability
Installment Agreement (IA) - A resolution that allows individuals or businesses to make monthly payments towards their back taxes owed
Internal Revenue Manual (IRM) - Manual containing taxation guidelines used by IRS employees in performing work related tasks
Internal Revenue Service (IRS) - Agency of the Department of Treasury that is responsible for the collection, enforcement, and interpretation of the Internal Revenue Code
Interest - Additional liability imposed at a particular rate for the delayed payment of tax obligations to the IRS or state agencies
IP Address - A unique string of numbers separated by periods that identifies each computer using the Internet Protocol (IP) to communicate over a network
Irrevocable - Not able to be changed, reversed or recovered and is considered final
IRS Security Summit - Partnership between the IRS and representatives of the software industry, tax preparation firms, payroll and tax financial product processors and state tax administrators to combat identity theft refund fraud to protect the nation's taxpayers
IRS Stakeholder Liaison - Someone who establishes relationships with practitioner and industry organizations for small business and self-employed taxpayers, who provides information about policies, practices and procedures the IRS uses to ensure compliance with tax laws
IT - Short for Information Technology, the study or use of systems (especially computers and telecommunications) for storing, retrieving, and sending information
Laptop - A computer that is portable and suitable for use while traveling
Layperson - A person without professional or specialized knowledge in a particular subject
Letter 3503C - IRS letter that is sent to a taxpayer when a first time abatement (FTA) is granted
Liability - The amount legally owed to a taxing authority
Lien - The government's claim on property and is generally formally placed when a taxpayer, such as a business or individual, fails to pay taxes owed. This does not necessarily mean property will be seized, it just ensures they get first rights over other creditors.
Low Income Certification - A below poverty level designation based on a chart on Form 656 that determines if a taxpayer would have a waiver from paying the user fee and deposits when submitting an Offer in Compromise (OIC) to the IRS for consideration
Lump Sum Cash Offer - One form of payment proposed with an Offer in Compromise in which 20% of the amount is sent with the offer, then the remainder paid within 5 months of the acceptance of the offer, and using a multiplier of 12 against available monthly income
Malware - Software that is intended to damage or disable computers and computer systems. The term is short for "malicious software"
Maximum Penalty - The largest amount of penalty that can legally be imposed on a taxpayer for wrongdoing or a failure to file or pay as required
Memorandum of Understanding (MOU) - Formal agreement between two or more parties. In this case, refers to many states and other government agencies agreeing to share compensation related information with one another
Minimum Penalty - The minimum penalty that will be imposed on a taxpayer for wrongdoing or a failure to pay or file as required
Ministerial Duties - Performing duties such as conducting worship, teaching, performing rites or sacerdotal functions, administration, or ceremonies like baptisms, weddings, funerals, or other ceremonies recognized by the church or religious order
Mobile Device - A portable computing device such as a smartphone or tablet computer
More Than An Inconvenience - The idea that a taxpayer must show they would sustain a substantial financial loss if required to pay a tax or deficiency on the due date
Motor Vehicle Records - External records the IRS can access to identify vehicles registered to the taxpayer or related business names to see if they are reporting accurate information on financial statements and help identify discrepancies
Multi-Factor Authentication (MFA) - An extra layer of security that requires not only a password and username but more than one other additional verification that consists of something that only that user has on them, has knowledge of, or is a part of who they are like biometrics
Net Realizable Value - The value of an asset that can be obtained upon the sale of the asset, less a reasonable prediction of the costs associated with the sale and after paying off any encumbrances against the asset
Non-Accountable Plan - A system under which a business provides payment to its employees to cover business expenses like meals, travel or supplies, but under which the employee does not have to substantiate the expense or return advance payments in excess of amounts used
Non-Liable Individual - If the liability is not a joint liability (for example a married filing joint return) then the IRS cannot collect from a person that is not liable, therefore they are referred to as 'non-liable'. Keep in mind that could change in a community property state
Notice - Letter or communication from the IRS that covers a specific issue about your account or tax return. It may request payment of taxes, notify you of a change to your account or ask for additional information
OFCCP - Office of Federal Contract Compliance Programs, a division of the US Department of Labor, ensures that employers doing business with the Federal government comply with laws and regulations requiring nondiscrimination
Offer in Compromise (OIC) - A request by a taxpayer to the IRS to allow them to settle for less than the liability the IRS has assessed, either by DATL (arguing the accuracy of the liability), DATC (arguing the ability to pay), or ETA (arguing special circumstances)
Office of Solicitor - Specific to the Department of Labor, it is a department that works with the DOL to provide a wide range of essential legal services to the Secretary of Labor and the Department's many agencies to meet the legal service demands of the entire DOL
Oral Advice - Advice provided to a taxpayer from an IRS employee verbally
Oral Contract - Type of business agreement that is spoken, not memorialized in writing. Although it can be difficult to prove the terms of an oral contract in the event of a breach, this type of contract is legally binding.
Oral Request - A request made to the IRS on behalf of a taxpayer made verbally to one of the IRS employees
Oral Thresholds - A dollar threshold that will allow Oral requests to be made to the IRS, with anything above that limit requiring a written request instead.
Ordinary Business Care and Prudence - The standard that a reasonable person would make provisions to meet tax obligations when events occur that they can anticipate
OSHA - Occupational Safety & Health Administration, a division of the US Department of Labor, is to assure the safety and health of workers at the workplace and to conduct inspections and investigations to determine if employers are complying with standard.
Override - To use one's authority to reject, cancel or make changes
Oversight - An unintentional failure to notice or do something
Parsonage - A church home provided for a member of the clergy or minister of the church.
Partial Pay Installment Agreement (PPIA) - A resolution that allows individuals or businesses to make monthly payments towards their back taxes owed, used when a taxpayer will not be able to satisfy the debt in full within the Statute of Limitations, and allowing for a smaller payment
Partial Removal - When only part of a penalty, tax or interest amount is removed, or abated, from a taxpayer's account
Password - A secret word, phrase, or string of characters that must be used to gain admission to something, like a computer, interface or system
Payment Designation - When a taxpayer specifies in writing where they want a voluntary payment to be applied. In the absence of this specific instruction, the IRS is allowed to post a payment in the manner they deem appropriate
Payroll - The total amount of wages and salaries paid by a company to its employees
Payroll Tax Deposit - In general, employers must deposit federal income tax withheld from employee's wages, and both the employer and employee social security and Medicare taxes usually either monthly or semi-weekly by electronic funds transfer (EFTPS)
Penalty - A monetary punishment imposed for failure to comply with IRS or state tax laws and regulations
Penalty Assistance Line - A phone number to reach IRS personnel that are trained to handle Penalty Abatement requests at 855-223-4017 ext225
Penalty Codes - The numbers assigned that indicate a penalty has been imposed, as witnessed when reviewing transcripts of a taxpayer
Penalty of Perjury - A signed statement, sworn to be true by the signer, that will make the signer guilty of the crime of perjury if the statement is shown to be materially false
Periodic Payment Offer - Form of monthly payments proposed with an Offer in Compromise and the first one sent with the offer, then the remaining balance paid in full between 6 and 24 months of submission, and using a multiplier of 24 against available monthly income
Personally Identifiable Information (PII) - Any data that could potentially identify a specific individual or information that can be used to distinguish one person from another
Phishing - The fraudulent practice of sending emails purporting to be from reputable companies in order to induce individuals to reveal personal information, such as passwords and credit card numbers
Physical Access Controls - The selective restriction of access to a place or other resource. The act of accessing may mean consuming, entering, or using
Physical Security / Safeguards - Protection of personnel, hardware, software, networks and data from events that could cause serious loss or damage. This includes protection from fire, flood, natural disasters, burglary, theft, vandalism and terrorism
Power of Attorney (POA) - The authority granted to act on the behalf of another person as their representative in matters before the IRS. This authority is granted on IRS Form 2848
Practitioner - A person actively engaged in a discipline or profession, and specially trained in that discipline
Practitioner Priority Service (PPS) - An IRS support line staffed by IRS personnel specially trained to handle practitioner questions at 866-860-4259
Preparer Penalty - A penalty imposed on a tax preparer for understatement of a taxpayer's liability, often caused by certain behaviors (unreasonable positions, willful or reckless conduct, disregard of rules, etc.)
Processability - Initial step where the IRS determines if a submitted Offer meets the minimum criteria to be considered. If it does, it will be forwarded for assignment to an Examiner / Agent or if not, it is returned to the taxpayer, but they usually keep all payments.
Professional Employer Organization (PEO) - Company that provides a service under which an employer can outsource employee management tasks, such as employee benefits, payroll and workers' compensation, recruiting, risk/safety management, and training and development
Prorated Expenses - The formula to allow for a non-liable individual's contribution towards expenses. TP=Taxpayer NL= NonLiable Individual. TP Gross Income divided by total of TP gross income plus NL gross income. This proration expense is then multiplied by the expense.
Qualified Minister - Someone who is duly ordained, commissioned or licensed by a recognized church or religious order and who performs ministerial duties
Quick Sale Value (QSV) - An estimate of the price a seller could get for the asset in a situation where financial pressures motivate the owner to sell in a short period of time, usually 90 calendar days or less. This calculation is usually 80% of the Fair Market Value (FMV)
Ransomware - A type of malicious software designed to block access to a computer system until a sum of money is paid
Real Estate Records - External records the IRS can access to identify real estate and properties titled to the taxpayer or related business names to see if they are reporting accurate information on financial statements and help identify discrepancies
Relationship of the Parties - Refers to the facts that describes the relationship between the parties as a result of the agreement, how they relate to one another, or to ensure no special relationship is previously defined, based on the 20 factor test the IRS uses for worker classification
Reliance - Dependence on or trust in someone to do something specific
Reporting Consistency - Reporting consistently with treatment as a contractor with correct and timely filed 1099 forms without fail for purposes of §530
Reasonable - Fair and sensible, or as much as would be appropriate or fair, or a moderate amount, without being excessive or unrealistic
Reasonable Basis - To have a reasonable and adequate basis which is supported by appropriate research, facts, and investigation for any particular action or conclusion
Reasonable Cause - Penalty relief that is granted based on all the facts and circumstances of a taxpayer's situation, if they are considered reasonable and show they exercised the same degree of care that any other reasonable person would in the same circumstances.
Reasonable Cause Assistant (RCA) - A artificial intelligence software program that assists IRS employees in making a determination if a penalty relief request can be granted
Reasonable Collection Potential (RCP) - Mathematical calculation the IRS uses to determine the value of assets, income, and expenses to determine the amount that will be accepted in an Offer In Compromise to settle a taxpayer debt in full
Refund Claim - Form 843 can be used to request a refund of amounts paid to the IRS in excess or in error, for penalties levied by the IRS in error, or to argue a trust fund recovery penalty by paying one employees amount for one quarter.
Refund Statute Expiration Date (RSED) - No credit or refund is allowed after the period of time that it expires as set by rule or law
Removable media - Any type of storage device that can be removed from a computer while the system is running to move data from one computer to another. Examples of removable media include CDs, DVDs and Blu-Ray disks, as well as diskettes and USB drives.
Responsible - Having an obligation to do something or having control over a required task
Responsible Person - Someone who has the duty to perform or the power to direct the act of collecting, accounting for, or paying over trust fund taxes
Revenue Officer (RO) - An individual who is employed by the Internal Revenue Service collections division, and whose job is to collect tax returns and tax payments on behalf of the government.
Return - A form that allows a taxpayer to make a statement of income, expenses, or other information used by IRS or state tax agencies to assess tax liability and settle payments.
Router - A device that forwards data packets to the appropriate parts of a computer network
Rules of Behavior - A code of conduct outlining the rules and responsibilities of, or proper practices for, an individual within an organization.
Safe Harbor - A provision of a statute or regulation that specifies that certain conduct will not be deemed to violate a given rule.
Security Breach - A security incident in which sensitive, protected or confidential data is copied, transmitted, viewed, stolen or used by an individual unauthorized to do so
Security Controls - Safeguards or countermeasures to avoid, detect, counteract, or minimize security risks to physical property, information, computer systems, or other assets
Security Review / Assessment - A collaborative process used to identify security-related issues, determine the level of risk associated with those issues, and make informed decisions about risk mitigation or acceptance
Self-employed - Working for oneself as a freelancer or the owner of a business rather than for an employee, could also be referred to as a contract laborer or contractor as well.
Sensitive Information - Data that must be protected from unauthorized access to safeguard the privacy or security of an individual or organization
Server - A computer or computer program that manages access to a centralized resource or service in a network
Significant Amount - A nominal or very small amount that would be considered insignificant in light of the total amount owing, or under a set threshold as determined by the IRS
Software - The programs and other operating information used by a computer
Software Security - Systems designed to protect software against malicious attack and other hacker risks so that the software continues to function correctly under such potential risks
Software Updates / Patches - An update to a computer program or its supporting data, to fix or improve it. This includes fixing security vulnerabilities and other bugs, which can be called bug fixes or bug fixes, and improving the usability or performance
Spear Phishing - The fraudulent practice of sending targeted emails from a known or trusted sender in order to induce targeted individuals to reveal confidential information
Statute of Limitations (SOL) - A law specifying the length of time available for a legal proceeding to be brought, or enforce a right
Statutory - Required, permitted, or enacted by statute or law
Statutory Employee - Required or enacted by statute or law, this class of workers is required to be treated as an employee by the nature of the work they perform
Streamlined Offer - When requesting an Offer in Compromise (OIC) a taxpayer can have a quicker process with greater flexibility if their household income <$100,000, Total liability <$50,000 when the offer is filed, and <$500,000 gross receipts if self-employed.
Substantial - Of considerable importance, size or worth
Substantial Underpayment Penalty - A penalty imposed on a taxpayer of 20% of the value of understated tax when considered substantially understated (more than 10% of the tax required to be shown or $5,000, whichever is greater)
Substantive Consistency - Keeping a consistent treatment of all workers holding substantially similar positions in the same manner for purposes of §530
Substitute For Return (SFR) - A tax filing that the IRS will create for a taxpayer in order to assess and collect tax, if a taxpayer neglects to file their own return
Switch - A device that connects devices together on a computer network by using packet switching to receive, process, and forward data to the destination device
Tamper Evident - A device or process that makes unauthorized access to the protected object easily detected. Seals, markings or other techniques may be tamper indicating
Tax Advocate Office (TAO) - The Office of the Taxpayer Advocate, also called theTaxpayer Advocate Service (TAS), is an independent office within the Internal Revenue Service which is designed to assist both businesses and individual taxpayers with tax-related issues
Tax Court - A specialized court of law that hears and adjudicates tax-related disputes and issues.and may allow a taxpayer to contest a tax deficiency determined by the Internal Revenue Service before paying the disputed amount.
Tax Gap - The difference between total amounts of taxes owed to the government versus the amount they actually receive, caused by taxpayers overstating deductions, understating income, or not filing or paying
Taxpayer Identification Number (TIN) - Identification number used for tax purposes in the United States. It is also known as a Tax Identification Number or Federal Taxpayer Identification Number
Tax Protester - While not used in the IRS, this term is often used by tax professionals and the public to describe someone that refuses to pay or file a tax, claiming that tax laws are invalid or unconstitutional
Third party collection agency - Separate companies contracted by the IRS or state to collect debts on their behalf for a fee
TIGTA - Treasury Inspector General for Tax Administration - established to provide independent oversight of Internal Revenue Service (IRS) activities
Timely - When a return is filed, or a payment made by the required due date, or a legal action or remedy is filed within the time period required and set by rule or law
Tolls Statute of Limitations - Tolling is a legal doctrine which allows for the pausing or delaying of the running of the period of time set forth by a statute of limitations
Transcript - Data generated from a tax return or transactions generated by the IRS on a taxpayer's account or record, usually in a report format
Trust Funds - Money withheld from a taxpayer or employee and held 'in trust' until paid to the IRS or agency requiring the monies to be withheld
Trust Fund Recovery Penalty (TFRP) - A collection device that assesses the amount of tax equal to all unpaid trust funds personally against other individuals determined to be responsible and willful in order to ensure these funds are paid to the IRS
Two-Factor Authentication (2FA) - An extra layer of security that requires not only a password and username but also something that only that user has on them, has knowledge of, or is a part of who they are like biometrics
Unanticipated Events - An event that cannot be foreseen by a reasonable person, and therefore cannot easily be accommodated ahead of time
Uncollectibility - Loans, receivables or other debts that have virtually no chance of being paid. An account may become uncollectible for many reasons, including the debtor's bankruptcy, an inability to find the debtor, lack of proper documentation, etc
Unemployment Insurance - A small source of income for workers that have lost their jobs through no fault of their own. Employers generally must contribute to this fund based on a percentage of gross amounts paid to the employee and file regular reports
Underpayment - To pay less than the required amount
Underreporting - Reporting less than the proper amount of income on a tax return to the IRS in order to reduce the amount of taxes liability owed
Undue Hardship - When considered in light of a number of factors, it is an action that would create significant difficulty or expense to an individual or business
User Fee - A fee charged with various requests in order to be considered. The application fee for an Offer In Compromise is currently $186
User Security - Access control to a file, printer or other network resource based on username. Users are identified individually or within a group to provide better security measures
VCSP (Voluntary Classification Settlement Program) - Voluntary IRS program that provides an opportunity to reclassify workers as employees for employment tax purposes for future tax periods with partial relief from federal employment taxes and reduced risk of audit
Vestments - A chasuble or other robe worn during services, or a garment that is ceremonial or official for performing these services only
Voluntary - Done, given, or acting entirely of one's own free will
Voluntary Compliance - An assumption that taxpayers will comply with tax laws and accurately report income and deductions honestly and pay the amounts owing on their own without being forced to
Voluntary Payment - A payment or partial payment a taxpayer makes towards a tax liability owing outside of a formal installment agreement or other agreement which a taxpayer has the right to designate where they want the payment applied.
Vulnerabilities - A weakness which allows an attacker to reduce a system's information security. Vulnerabilities are comprised of a system susceptibility or flaw, an attacker's access to the flaw, and their capability to exploit the flaw.
W-2 - IRS form that reports an employee's annual wages and the amount of taxes withheld from their paycheck along with other deductions or important information
WiFi - A facility allowing computers, smartphones, or other devices to connect to the Internet or communicate with one another wirelessly within a particular area
Willful Blindness - A term used in law to describe a situation in which a person seeks to avoid civil or criminal liability for a wrongful act by intentionally by keeping himself or herself unaware of facts which would render him or her liable
Willfulness - According to the IRS it is Intentional, deliberate, voluntary, reckless, and knowing as opposed to accidental
Worker Classification - Determination if a worker is an independent contractor or employee given the facts and circumstances of their work arrangement.
Workers' compensation - Form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue their employer for the tort of negligence
Workstation - A desktop computer terminal, typically networked to a server and more powerful than a personal computer
WPA2 - Short for Wi-Fi Protected Access 2 - Pre-Shared Key, and also called WPA or WPA2, is a method of securing your network with the use of an optional Pre-Shared Key (PSK) authentication, which requires using the key or code to gain access
Written Advice - Advice provided to a taxpayer from an IRS employee in written form, or by a tax professional to a taxpayer
Written Information Security Plan (WISP) - A written plan that documents the measures taken to protect the security, confidentiality, integrity, and availability of the personal information and other sensitive information collected, created, used, and maintained
Written Request - A request made to the IRS on behalf of a taxpayer made in a written format to one of the IRS employees, usually with supporting documentation
Zero Day Vulnerability - An attack that takes advantage of a security vulnerability on the same day that the vulnerability becomes generally known. In other words, there are "zero days" between the time the vulnerability is discovered and the first attack