Glossary of Tax Terms (for individuals and families)
A B C D E F G- H I L M N O P R S T U-V-W
Answer
Appeal
Appearance
Assessment
Audit
B
Bill for Taxes Due (Intent to Assess)
This is a Michigan form that informs the taxpayer that the Michigan Department of Treasury intends to assess them a certain amount of additional tax, penalty, and/or interest. Taxpayers have 60 days from the date of the statement to request an informal conference.
C
CDP Hearing – See Collection Due Process Hearing
Child Tax Credit (CTC)
CNC –See Currently Not Collectable
Collection Alternative
This is an alternative way to pay or resolve a tax debt rather than by forced collections using levies and garnishments. There are three collection alternatives: Currently Not Collectible, Installment Agreement, or Offer in Compromise. All three require completing an application and providing supporting documentation.
Collection Due Process Hearing (CDP Hearing)
A taxpayer is entitled to a hearing before the IRS may take forced collection actions like a lien, levy, or garnishment. The taxpayer may offer a collection alternative in place of the proposed forced collection action. The IRS must give a taxpayer 30 days to request this hearing. The Form 12153 is used to request a collection due process hearing.
Collection Information Statement (CIS)
This is the IRS form that is completed to request a collection alternative. The most common forms are the Form 433-A and Form 433-F, depending on the taxpayer’s circumstances. If the taxpayer is dissatisfied with the decision of the collection due process hearing, they may appeal the decision to the U.S. Tax Court. See also, Currently Not Collectible, Installment Agreement, Offer in Compromise, and Financial Standards.
Collection Statute Expiration Date (CSED)
The IRS generally has ten years from the date of a tax assessment to collect the tax, penalty, and interest.
Correspondence Audit
The IRS sends a taxpayer a notice that questions specific items on a tax return for a specific tax year. For instance, the IRS may send a taxpayer a notice informing the taxpayer that an employer reported wages that were not reported on their 2021 tax return. Any items that are not listed in the notice are not being audited. Correspondence audits usually request a response in 20-30 days. If the IRS does not agree with the response or does not receive any response at all, then the IRS correction is deemed correct, and the taxpayer generally owes more tax, penalty, and interest. Remember that changes to things like income or number of dependents claimed can impact other parts of the tax return. For instance, the excluded wages discussed above may lower the amount of Earned Income Tax Credit and Dependent Care Credits that taxpayer may claim for that tax year. In this case, the taxpayer is actually being audited for the amount of income they reported and the claimed credits.
Credit
A tax credit is a benefit granted by Congress that enables a taxpayer to lower their tax bill by a certain amount for a certain purpose. Tax credits may be limited by the amount of income your earn or by other factors. Important tax credits include the Earned Income Tax Credit, Child Tax Credit, Dependent Care Tax Credit, American Opportunity Credit, and Lifelong Learning Credit.
CSED – See Collection Statute Expiration Date.
Currently Not Collectible (CNC)Deduction
D
Doubt as to Collectability – Special Circumstances OIC
Doubt as to Collectability OIC
Doubt as to Liability OIC
E
Earned Income Tax Credit (EITC or EIC)
Economic Hardship
Under the law (Internal Revenue Code ____), the IRS may not levy or garnish a taxpayer if it will cause an economic hardship. This is true even if the taxpayer is behind in filing their tax returns (See Vinateri v US).
Effective Tax Administration OIC (ETA OIC)
This is an offer in compromise where the taxpayer argues that even though they have enough assets to pay their tax debt, they should not have to use those assets as a matter of public policy.
Exemption
F
Field Audit
Filing Status
Final Bill for Taxes Due (Final Assessment)
Financial Standards
First Time Penalty Abatement
G - H
Garnishment
Hardship
I
Individual Taxpayer Identification Number (ITIN)
Informal Conference (Michigan)
This is an informal meeting with a hearing officer (from the Department of Treasury) and other Treasury employees to discuss a tax controversy. It is an informal because there are no recordings of the proceedings. You are entitled to be represented by an attorney (at your cost) at the hearing. The hearing referee, who is an employee of the Michigan Department of Treasury, will listen to the facts and law regarding your case, then issue a decision. If the taxpayer is dissatisfied with the hearing referee’s decision, they may appeal to the Michigan Tax Tribunal or Michigan Court of Claims.
Injured Spouse
Innocent Spouse
Installment Agreement
Internal Revenue Code (IRC)
Internal Revenue Manual (IRM)
IRS Internal Revenue ManualThe Internal Revenue Manual are the IRS's procedures. All employess are bound by this procedure manual. Full-text available for free at:
IRS Independent Office of Appeals
Itemized Deduction
L
Levy
Lien
Lien Discharge
Lien Release
Lien Withdraw
LITC Guidelines
Local Standards
Low-Income Taxpayer Clinic
M
Managing Client Expectations
Michigan Account Receivables Collection Service (MARCS)
Michigan Compiled Laws (MCL)
Michigan Home Heating Credit
Michigan Homestead Property Tax Credit
Michigan Poverty Exemption
Michigan Tax Tribunal
Michigan Court of Claims
N
National Standards
Negligence Penalty
Nonrefundable Credit
Nonresident Alien (for tax purposes)
Notice of Deficiency
Notice of Determination
O-P
Offer in Compromise
Penalty
Petition
Power of Attorney
Proof of Service
R
Refundable Credit
Resident Alien (for tax purposes)
Retainer Agreement
Revenue Procedure (Rev. Proc.)
S
Standard Deduction
Statute of Limitations
Stipulation
Streamlined Amount
T
Tax Credit
Tax Treaty
Tax Year
Taxpayer Advocate Service
Treasury Regulation (Treas. Reg.)
Trust Fund Recovery Penalty (TFRP)
U- V - W
U.S. Tax Court
U.S. Tax Court Rules
Vinatieri
Withholding