IRS glossary in plain English
The IRS writes as if everyone went to tax school. Here are 40+ terms from real notices, levy, lien, abatement, deficiency, AUR, CSED, each explained in two sentences a human can understand.
A
Abatement
The removal of a penalty, and the interest charged on that penalty, from your account. The two main doors: first-time abatement (clean compliance for the prior three years) and reasonable cause (illness, disaster, reliance on bad advice). Requesting it costs nothing; see how much it could save with the penalty calculator.
Accuracy-related penalty
A penalty of 20% of the underpaid tax, proposed when the IRS believes a return was negligently or substantially wrong, you'll see it on many CP2000 notices. It can be contested separately from the tax itself with a reasonable-cause explanation.
Adjusted Gross Income AGI
Your total income minus specific adjustments (retirement contributions, student loan interest…), the number most tax thresholds key off. The IRS also uses your prior-year AGI as an identity check when you e-file.
Amended return Form 1040-X
The form for correcting an already-filed return. Counterintuitive but important: the IRS asks you not to file one in response to a CP2000, the notice's response form replaces it for those items.
Assessment
The moment a tax amount is formally recorded as a legal debt on your account. Before assessment, amounts are proposals you can contest; after, they're collectible, which is why responding at the proposal stage matters so much.
Automated Underreporter AUR
The IRS computer program that matches your return against W-2s and 1099s filed by employers, banks and brokers, and generates CP2000 notices when they disagree. A computer, not an auditor: which is why its proposals miss context like cost basis.
B
Balance due
The amount the IRS says you currently owe, tax, penalties and interest combined. The first balance-due letter is usually a CP14, and it opens the collection sequence if unpaid.
C
CDP hearing Collection Due Process
Your legal right to pause a levy and have an independent office review your case, payment alternatives included. The catch: you must request it (Form 12153) within 30 days of a final notice like the LT11, and the window doesn't extend.
Certified mail
A postal service that gives you dated proof of mailing and delivery. The standard way to send IRS responses: if timeliness is ever disputed, your receipt is the evidence.
Currently Not Collectible CNC
A hardship status that pauses IRS collection when paying would leave you unable to cover basic living expenses. The debt doesn't vanish, interest still runs, but levies stop while the status holds.
Cost basis
What you originally paid for an asset, the amount subtracted from sale proceeds to compute your actual gain. The single most common CP2000 error: the IRS computer sees the sale, assumes a basis of zero, and taxes the whole amount.
CP notice
A computer-generated IRS notice about your account, identified by "CP" plus a number (CP14, CP2000, CP504…). Each number has a fixed meaning, look yours up here or browse the full directory.
Collection Statute Expiration Date CSED
The date the IRS's legal window to collect a tax debt closes, generally 10 years from assessment. Certain actions (offers in compromise, bankruptcy, time abroad) pause the clock, so the real date varies by case.
D
Deficiency / Notice of deficiency the "90-day letter"
The formal determination that you owe more tax than reported, delivered by a CP3219A or Letter 531. It opens a fixed 90-day window to petition Tax Court, one of the very few IRS deadlines that cannot be extended for any reason.
Document Upload Tool
The IRS's online portal for submitting response documents digitally, using an access code printed on eligible notices. When your letter offers it, it's the fastest response channel, no postal delays, instant confirmation.
E
Enrolled Agent EA
A federally licensed tax practitioner authorized to represent taxpayers before the IRS, often more affordable than a CPA or attorney for collection and notice matters. For genuinely complex cases, this is who we suggest calling.
Estimated tax
Quarterly prepayments required when income isn't subject to withholding, self-employment, investments, rentals. Mismatches between what you claimed and what the IRS recorded trigger CP23 notices; underpaying during the year triggers the CP30 penalty.
F
Failure-to-file penalty
Generally 5% of the unpaid tax per month late, capping at 25% in just five months, ten times harsher than the pay penalty. The takeaway that saves people the most money: always file on time, even when you can't pay.
Failure-to-pay penalty
Generally 0.5% of the unpaid tax per month, up to 25%, and it drops by half while an installment agreement is active. Estimate yours with the penalty calculator.
First-time abatement FTA
An administrative waiver that erases failure-to-file and failure-to-pay penalties if your prior three years are clean, no questions about why you were late. The most underused free money in the IRS system.
G
Garnishment wage levy
A levy applied to your paycheck: your employer must send part of each check to the IRS until the debt resolves or the levy releases. It only happens after the final-notice sequence, which is why those letters matter.
I
Identity Protection PIN IP PIN
A six-digit code, renewed yearly via the CP01A letter, that must accompany your return once you're enrolled, it blocks anyone else from filing under your SSN. Lose it and e-filing fails until it's retrieved.
Injured spouse Form 8379
The claim that recovers your share of a joint refund when it was seized for your spouse's separate debt, the situation behind many CP49 offsets. Distinct from innocent spouse relief, which concerns liability itself.
Innocent spouse relief
Relief from tax owed on a joint return because of your spouse's (or ex-spouse's) errors you didn't know about. A liability question, not a refund question, the deeper cousin of injured spouse.
Installment agreement payment plan · Form 9465
An IRS-approved monthly payment plan for tax debt. Beyond stopping the collection letters, it halves the failure-to-pay penalty rate while active. Defaulting on one triggers a CP523.
Interest
Charged on unpaid tax and penalties at a rate set quarterly (federal short-term rate + 3 points), compounding daily. It can't be waived alone, but interest on an abated penalty disappears with the penalty.
L
Levy
The actual legal seizure of property to pay tax debt, bank accounts, wages, state refunds, even Social Security (up to 15%, via CP91). A levy takes; a lien merely claims. Final notices like the LT11 are the legally required warning first.
Lien Notice of Federal Tax Lien
The government's legal claim against your property as security for a tax debt, it attaches to what you own and complicates selling or refinancing, but takes nothing by itself. The public filing arrives via Letter 3172, with hearing rights.
LT notice
A letter from the IRS Automated Collection System, "LT" plus a number. The one to know: LT11, the final notice of intent to levy with its 30-day hearing window.
M
O
Offer in Compromise OIC
An agreement to settle tax debt for less than the full amount, when full payment would cause hardship or isn't collectible within the statute. Real but rare, beware the "pennies on the dollar" ads; the IRS's own pre-qualifier tool tells you if it's plausible.
Offset refund offset
The interception of your refund to pay another debt, federal or state taxes, child support, student loans. The notice telling you it happened is typically a CP49; if the debt was your spouse's alone, see injured spouse.
P
Penalty
An amount added to tax for a compliance failure, filing late, paying late, inaccuracy, underwithholding. The crucial pairing: most penalties are removable (see abatement), and interest on removed penalties vanishes too.
Proposed amount
An amount the IRS thinks you owe but hasn't assessed yet, the operative word on every CP2000. Proposals can be contested, reduced, or eliminated with documentation; assessments enter collection. Know which one your letter contains.
R
Reasonable cause
The "life happened" standard for removing penalties: serious illness, natural disaster, death in the family, unavoidable records loss, reliance on wrong professional advice. Documented honestly, it works far more often than people expect.
Refund statute 3-year rule
Your deadline to claim a refund: generally 3 years from the return's due date. Miss it and the money is legally gone, the urgency behind CP80 and CP81 notices about unfiled years with credits waiting.
Revenue officer RO
A human IRS collection agent assigned to larger or persistent cases, the sign your file left the automated system. Letters from an RO (like the Letter 1058) deserve immediate, careful attention.
S
Substitute for Return SFR
The return the IRS files for you when you don't, using only reported income, no deductions, no credits, worst-case filing status. Almost always overstates what you'd owe; filing your real return, even late, usually replaces it. The endgame of ignored CP59 notices.
Statute of limitations
The legal time limits framing everything: generally 3 years for the IRS to audit, 10 years to collect (see CSED), 3 years for you to claim refunds. Unfiled returns keep the audit clock from ever starting.
T
Taxpayer Advocate Service TAS
An independent organization inside the IRS that helps when normal channels fail, hardship, endless delays, systemic errors. Free, and empowered to cut through the machine when you qualify.
Tax Court
The federal court where you can contest a deficiency before paying, but only if you petition within the 90-day window of a notice of deficiency. Miss it, and disputing means paying first, then suing for a refund.
Transcript IRS account transcript
The IRS's official record of your account, payments, assessments, penalties, notices issued, downloadable free from your IRS Online Account. The first thing to pull when a notice's numbers don't match your memory.
W
Withholding
Tax taken from each paycheck by your employer and sent to the IRS on your behalf, reported on your W-2. Discrepancies between claimed and reported withholding are a classic trigger for refund-review notices like the CP05.
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