Tax Relief Glossary

Reasonable Collection Potential is the mathematical floor the IRS uses to evaluate an Offer in Compromise — the total amount the government believes it can collect from a taxpayer before the Collection Statute expires.

An Offer in Compromise is a formal agreement between a taxpayer and the IRS to settle a tax debt for less than the full amount owed, accepted when collection in full would create economic hardship or the amount offered represents the most the IRS can reasonably expect to collect.

Quick Sale Value is the IRS's estimate of what an asset would realistically sell for in a forced or expedited sale, typically calculated as 80% of Fair Market Value for most assets.

An installment agreement is a formal payment plan with the IRS that allows a taxpayer to pay a tax debt in monthly installments over a period of time rather than in a single lump sum.

Penalty abatement is the reduction or elimination of IRS penalties assessed on a tax account, available through First-Time Penalty Abatement, Reasonable Cause, or Statutory Exceptions.

The IRS Fresh Start Initiative is a set of administrative programs — expanded in 2011 and updated through 2026 — that may streamline access to installment agreements, lien relief, and Offer in Compromise settlements for taxpayers meeting certain criteria.

The CSED is the expiration date on the IRS's legal authority to collect a tax debt — generally 10 years from the date of assessment under IRC § 6502.

Currently Not Collectible is an IRS status that may temporarily suspend active collection enforcement when a taxpayer demonstrates inability to pay after allowable living expenses. Subject to IRS discretion.

A Federal Tax Lien is a legal claim by the U.S. government against all of a taxpayer's current and future property when a tax debt is assessed, notice is given, and payment is demanded but not made.

A levy is the IRS's legal seizure of property or rights to property — including bank accounts and wages — to satisfy an unpaid tax debt after notice and demand requirements have been satisfied.

P.L. 119-21, enacted in 2025, is the sweeping tax legislation that permanently extended the Tax Cuts and Jobs Act rates, added an above-the-line deduction for qualified overtime pay, and raised the 1099-NEC reporting threshold to $2,000.

The Trust Fund Recovery Penalty is a 100% penalty imposed personally on any 'responsible person' who willfully fails to collect, account for, or pay over federal payroll trust fund taxes to the IRS.

Necessary Living Expenses are the IRS-defined budgets for food, housing, transportation, healthcare, and other costs that a household is allowed to deduct from gross income when calculating Monthly Disposable Income for collection purposes.

Collection Financial Standards are the IRS's annually updated allowable expense tables — National Standards, Local Standards, and Healthcare Standards — used to determine how much of a taxpayer's income can be considered discretionary for collection purposes.

A Collection Due Process hearing is a formal taxpayer right under IRC § 6330 to appeal an IRS lien filing or proposed levy before an independent Appeals Officer, with the option to escalate to U.S. Tax Court if Appeals disagrees.

A Collection Appeals Program hearing is a faster, less formal IRS appeals process for disputing rejected installment agreements, proposed lien filings, or levies — but unlike a CDP hearing, it does not provide Tax Court access.

Audit reconsideration is an IRS administrative process that allows a taxpayer to dispute an assessment made from an audit they did not attend, did not agree with, or have new documentation to support.

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers resolve problems with the IRS and recommends systemic changes to prevent future problems.

A Notice of Deficiency is a formal IRS determination that additional tax is owed, triggering a 90-day window during which the taxpayer may petition the U.S. Tax Court without first paying the disputed amount.

Innocent Spouse Relief is an IRS provision that releases one spouse from joint and several liability for tax, penalties, and interest when the other spouse improperly reported or omitted income on a jointly filed return.