Glossary

Fraud Penalty

The fraud penalty is a severe penalty imposed by the IRS on taxpayers who deliberately attempt to evade paying their taxes through fraudulent actions. The penalty is 75% of the underpayment of tax attributable to fraud.

Fraudulent actions may include:

Falsifying income or deductions.
Failing to report income.
Hiding assets to avoid taxes.

The IRS takes tax fraud seriously, and in addition to the fraud penalty, taxpayers may face criminal charges, fines, and imprisonment. The burden of proof for fraud lies with the IRS, and they must demonstrate that the taxpayer intentionally committed fraud.

To avoid the fraud penalty, taxpayers should ensure that their tax returns are accurate and complete, and they should seek professional advice if they are uncertain about any aspect of their tax reporting.

Recommendation

Letter 2057: Non-Filer Notice

IRS Letter 2057 notifies taxpayers that they have failed to file a required tax return and provides instructions on how to file to avoid penalties.

Federal Payment Levy Program (FPLP)

The Federal Payment Levy Program (FPLP) allows the IRS to levy federal payments, such as Social Security benefits, to collect unpaid tax debt.

Alternative Minimum Tax (AMT)

The Alternative Minimum Tax (AMT) is a supplemental tax system that requires certain high-income taxpayers to calculate their taxes twice and pay the higher amount.

CP2000 Notice: Underreporter Inquiry

IRS CP2000 Notice notifies taxpayers of income discrepancies and proposes additional tax owed if no adjustments are made.

CP30 Notice: Penalty for Underpayment of Estimated Tax

The IRS CP30 Notice notifies taxpayers that they owe a penalty due to underpayment of estimated taxes, along with instructions for payment.

Self-Employment Tax Deduction

The self-employment tax deduction allows self-employed taxpayers to deduct the employer-equivalent portion of their self-employment taxes, reducing their taxable income.

Partial Payment Installment Agreement (PPIA)

A Partial Payment Installment Agreement (PPIA) allows taxpayers to make reduced monthly payments on their IRS tax debt, often settling for less than the full balance.

CP259 Notice: Return Delinquency Notice

The IRS CP259 Notice warns taxpayers that they have not filed a required tax return and outlines steps to file and avoid penalties or further enforcement actions.

Letter 86C: Refusal to Process Offer in Compromise

IRS Letter 86C notifies taxpayers that the IRS has refused to process their offer in compromise, explaining the reasons for the refusal and next steps.

Corporate Tax Rate

The corporate tax rate is the percentage of income that corporations must pay to the federal government as tax, currently set at 21%.