IRS Tax Debt Glossary
A short, practical reference for the terms people commonly see in IRS collection notices and tax-debt conversations.
- Assessment
- The formal recording of tax, penalties or other amounts on an IRS account. Collection time limits are generally tied to assessment dates, not simply the tax-return year.
- Balance Due
- Tax, penalties, interest or other assessed amounts that remain unpaid on an IRS account.
- Collection Due Process (CDP)
- A hearing process that may be available after certain lien or levy notices. Deadlines matter, so the specific notice should be reviewed promptly.
- Collection Statute Expiration Date (CSED)
- The date the IRS collection period is expected to expire for a particular assessment, subject to events that may suspend or extend the period.
- Currently Not Collectible (CNC)
- A hardship status in which the IRS may temporarily delay collection after determining that payment would prevent the taxpayer from meeting necessary living expenses. The debt does not disappear.
- Federal Tax Lien
- The government’s legal claim against property arising from unpaid assessed tax. A Notice of Federal Tax Lien is the public filing that alerts creditors to that claim.
- Installment Agreement
- An IRS payment arrangement that allows an approved balance to be paid over time.
- Levy
- A legal seizure of property or rights to property to satisfy tax debt. A levy is different from a lien.
- Notice and Demand for Payment
- An IRS bill requesting payment after tax is assessed.
- Offer in Compromise (OIC)
- An IRS program that may settle eligible tax debt for less than the full amount when applicable standards are met. Not everyone qualifies.
- Penalty Relief
- Administrative or reasonable-cause procedures that may reduce certain IRS penalties when requirements are satisfied. Relief from penalties does not automatically eliminate the underlying tax.
- Power of Attorney (Form 2848)
- An authorization that allows an eligible representative to act for a taxpayer before the IRS for specified tax matters and periods.
- Revenue Officer
- An IRS collection employee assigned to work certain delinquent tax accounts.
- Simple Payment Plan
- Current IRS terminology for qualifying simplified long-term payment arrangements. Eligibility depends on current IRS rules and filing/payment compliance.
- Substitute for Return (SFR)
- A return the IRS may prepare using available information when a required taxpayer return has not been filed. A taxpayer may still need to evaluate filing an accurate original return.
- Tax Transcript
- An IRS record showing selected return or account information. Different transcript types show different parts of the tax history.
- Wage Levy
- An IRS levy served on an employer that can continue to attach to wages across pay periods until released or otherwise resolved.
See a term on an IRS notice that you do not understand?
Call (844) 713-9512 and have the notice available.