Glossary

IRS Letter 4387 notifies taxpayers whether their request for an extension of time to pay their tax debt has been approved or denied and outlines the next steps.

IRS Letter 4903 is sent to employers with unpaid employment tax, requesting prompt payment to avoid additional charges and potential enforcement actions.

IRS Letter 525 notifies taxpayers of proposed changes to their tax return and provides 30 days to accept the changes or file an appeal.

IRS Letter 6152 notifies taxpayers that a federal tax lien has been filed against their property due to unpaid taxes and outlines steps to resolve the lien.

IRS Letter 6152 notifies taxpayers that a required tax return is missing and provides steps to submit the return and avoid additional penalties.

IRS Letter 668D notifies taxpayers that the IRS has released a levy on their property or assets, indicating that the debt has been resolved.

IRS Letter 681C confirms the acceptance of a payment arrangement request but clarifies that it is not a formal Installment Agreement.

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.

An IRS levy is a legal action that allows the IRS to seize property, wages, or bank accounts to collect unpaid tax debt.

An IRS levy is a legal action that allows the IRS to seize a taxpayer’s assets, such as wages or bank accounts, to satisfy unpaid tax debt.

A levy release stops the IRS from seizing assets, such as wages or bank accounts, to satisfy unpaid tax debt.

A federal tax lien is a legal claim against your property, including real estate, vehicles, and financial assets, for unpaid tax debt.

A nonrefundable tax credit can reduce a taxpayer’s liability to zero but cannot generate a refund if the credit exceeds the amount of taxes owed.

The IRS files a Notice of Federal Tax Lien (NFTL) to claim legal rights over a taxpayer’s property until the unpaid tax debt is satisfied.

An IRS Offer in Compromise (OIC) allows taxpayers to settle their tax debt for less than the full amount owed based on their financial situation.

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.

An IRS Payment Plan allows taxpayers to pay their tax debt in monthly installments over time, helping them manage large tax liabilities.

Reasonable cause is a valid explanation, such as illness or natural disaster, that taxpayers can use to request IRS penalty abatement.

Reasonable Collection Potential (RCP) is the IRS’s estimate of how much a taxpayer can pay toward their tax debt through liquid assets and future income.

A refundable tax credit can reduce a taxpayer’s liability to zero and generate a refund for any amount of the credit that exceeds the taxes owed.