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Tax relief, in plain English
The vocabulary in this field does a lot of work to make simple ideas sound impenetrable. Here's what the terms actually mean.
- Assessment
- The formal recording of a tax liability on your IRS account. Most collection timelines — including how long the IRS has to collect — run from this date, not from when the return was due.
- CSED (Collection Statute Expiration Date)
- The date the IRS's authority to collect a particular assessed balance ends. Each tax year has its own. Certain events, like a pending offer or bankruptcy, pause it. It's one of the most strategically important numbers on your transcripts.
- Currently Not Collectible (CNC)
- A hardship status in which the IRS agrees that collecting would leave you unable to meet basic living expenses, and stops active collection. The balance and interest remain.
- Discharge (of a lien)
- Removal of a federal tax lien from one specific piece of property — typically so a sale can close — while the lien remains against everything else.
- Enrolled Agent (EA)
- A tax practitioner licensed federally by the Treasury with unlimited rights to represent taxpayers before the IRS. Along with CPAs and attorneys, one of only three categories permitted to do so.
- Innocent spouse relief
- Relief from joint liability for a balance arising from a spouse's or former spouse's income or errors, where holding you responsible would be unfair.
- Installment agreement
- A formal arrangement to pay a tax balance over time. In good standing it generally suspends enforced collection.
- Levy
- The actual seizure of property to satisfy a tax debt — wages, bank funds, receivables. Distinct from a lien, which only secures a claim.
- Lien (Notice of Federal Tax Lien)
- The government's legal claim against your property when a balance goes unpaid. Filing the public notice is what makes it visible to lenders and title companies.
- Offer in Compromise (OIC)
- An agreement in which the IRS accepts less than the full balance and closes the account. Qualification is driven by a formula, not by negotiation.
- Penalty abatement
- Removal of penalties, either through first-time abatement based on a clean compliance history, or through reasonable cause based on circumstances outside your control.
- Power of Attorney (Form 2848)
- The authorization that lets a representative speak to the IRS on your behalf, receive your notices, and negotiate for you.
- RCP (Reasonable collection potential)
- The IRS's calculation of what it could realistically collect from you: equity in assets plus projected disposable income. The figure that determines whether an Offer in Compromise is viable.
- Reasonable cause
- The standard for penalty relief based on circumstances that prevented compliance despite ordinary business care — serious illness, disaster, destroyed records, or reliance in good faith on a professional.
- Substitute for return (SFR)
- A return the IRS files on your behalf when you don't. It includes no deductions, credits, dependents, or cost basis, so the resulting balance is usually far higher than what you actually owed. Filing an accurate return can replace it.
- Subordination
- An agreement letting another creditor take priority over the federal tax lien — typically what makes a refinance possible while a balance is outstanding.
- Transcripts
- IRS records of your account. Account transcripts show balances, assessments, and collection dates; wage and income transcripts show what third parties reported under your name for a given year.
- Trust Fund Recovery Penalty (TFRP)
- Personal assessment of the withheld portion of payroll taxes against individuals found responsible for paying them over who willfully failed to do so. It survives the closure of the business.
- Withdrawal (of a lien notice)
- Removal of the public Notice of Federal Tax Lien from the record. Unlike a release, it can sometimes be obtained while a balance still exists.
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