A GREAT READING LIST

IRS Publications, Resources, Tools, Abbreviations & Acronyms

USEFUL IRS PUBLICATIONS, www.irs.gov/forms.html

1 Your Rights as a Taxpayer

3 Appeal Rights and Preparation of Protests for Unagreed Case

15 Circular E, Employer's Tax Guide

17 Your Federal Income Tax

334 Tax Guide for Small Business

463 Travel, Entertainment, and Gift Expenses

505 Tax Withholding and Estimated Tax

509 Tax Calendar

525 Taxable and Nontaxable Income

533 Self-Employment Tax

534 Accounting Periods and Methods

535 Business Expenses

542 Tax Information on Corporations

544 Sales and Dispositions of Assets

551 Basis if Assets

553 Highlights of Tax Changes

556 Examination of Return, Appeal Rights, and Claims for Refund

583 Taxpayers Starting a Business

587 Business Use of Home

589 Tax Information of S Corporation

594 Understanding the Collection Process

746 Information about Your Notice, Penalty and Interest

783 Instructions on How to Apply for Certificate of Discharge of Property from Federal Tax Lien

784 How to Prepare Application for Certificate of Subordination of Federal Tax Lien

910 Guide to Tax Free Services

917 Business Use of Car

947 Practice Before IRS and Power of Attorney

1045 Tax Practitioner Program, Information Guide and Order Blanks 7005 & 7006.

1194 Tax Information Publications

1194-B Business Tax Information Publications

1383 The Correspondence Process

1450 Instructions on How to Request a Request for Release of Federal Tax Lien

1494 Table for Figuring Amount Exempt from Levy of Wages, Salary, and Other Income

1546 How to use the Taxpayer Advocate Office

1779 Independent Contractor or Employee

1854 How to Prepare a Collection Information Statement

Circular 230, Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Actuaries, and Appraisers before the IRS

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GOVERNMENT's SUPER HIGHWAY

If you are not listed on it, you need to be! If you are not accessing the information on the Internet, you need to be!

Government Information Service www.pueblo.gsa.gov/

Government Printing Office www.access.gpo.gov/index.html

House Ways and Means Committee www.house.gov/ways_means/

IRS small business home page http://www.irs.gov/businesses/index.html

Library of Congress http://www.loc.gov

Small Business Administration www.sba.gov

Housing and Urban Development www.hud.gov

Department of Agriculture www.usda.gov

U. S. Census Bureau www.census.gov

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IRS Resources & Tools

INTERNAL REVENUE CODE

By being familiar with the code, regulations, and rulings you will be able to determine when an IRS employee is making a mistake in the law. There is an appeal process for mistakes or disagreements in law. Refer to IRS Publication No. 5. Sections of the code that guide the IRS compliance activities are IRC

Sec. 6001. Notice or regulations requiring records, statements, and special returns, through IRC Sec. 7852, Other applicable rules.

COURT CASES

The courts are constantly interpreting the Internal Revenue Code and they provide the practitioner with guidance needed to interpret the Code.

INTERNAL REVENUE REGULATION

The national office of the IRS writes regulations which interpret the Code.

CODE OF FEDERAL REGULATIONS

TITLE 26--INTERNAL REVENUE, Volume 19, Parts 600 to end, [Revised as of April 1, 2000], PART 601--STATEMENT OF PROCEDURAL RULES

INTERNAL REVENUE RULINGS & PROCEDURES

The national office provides taxpayers and practitioners with guidance and interpretations of the Code through the use of Revenue Procedures and Revenue Rulings.

INTERNAL REVENUE MANUAL

The Internal Revenue Manual (IRM) is written by the IRS national office to provide guidance and directions to IRS employees during the performance of their duties. How often has an IRS employee said, “Its our policy” or “I’m required by the manual to …”? When the practitioner is told “its policy,” a thorough knowledge of the manual will give the practitioner the advantage of “what is policy” so that he/she may judge when the IRS employee is or is not following policy. Although the National Office provides guidance as to national policy, each region and district may have regional or local policies that are not incomplete compliance with national policy. When a question on correct policy arises, the practitioner should first check in the IRM, call the group manager or follow the chain of command on up to the

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ABBREVIATIONS AND ACRONYMS

ABBR. DEFINITION

23C Assessment Date

ACC Associate Chief Counsel

ACI Appeals Coordinated Issues

ACR Audit Change Report

ACS Automated Collection Service

ACS Automated Collection Services

ADEPT Automated Deposit of Electronic Payments for Taxes

ADP Automatic Data Processing

ADR Alternative Dispute Resolution Procedures

AGI Adjusted Gross Income

AICPA American Institute of Certified Public Accountants

AIMS Audit Information Management System

AM Area Manager

AO Appeals Officer

AOC Advice of Credit

AOD Actions on Decisions

ASED Assessment Statute Expiration Date

AT&F Bureau of Alcohol, Tobacco and Firearms

ATAO Application for Taxpayer Assistance Order to Relieve Hardship

ATG Audit Technique Guide

ATIN Adoption Taxpayer Identification Number

AUR Automated Under Reporter

AWISS Agency Wide Information Systems Services

AWSS Agency Wide Shared Services

BeST Benefits and Services Team

BMF Business Master File

BWH Backup Withholding

C&L Communications & Liaison

CAF Centralized Authorization File

CAP Collection Appeals Process

CARE Communications, Assistance, Research & Education

CAS Computer Audit Specialist (LMSB Team)

CAS Customer Account Services (TE/GE & W&I Teams)

CAS Customer Accounts Service, SBSE

CBAF Commercial Bank Address File

CC Chief Counsel

CC Command Code

CCO Computing Center Operations

CCR Comprehensive Case Resolutions

CDP Collection Due Process

CEP Coordinated Examination Program

CFR Code of Federal Regulations

CI Criminal Investigation

CID Criminal Investigation Division

CIO Chief Information Officer

CIP Compliance Initiative Project

CIS Collection Information Statement

COL Collection

CORR Correspondence Return

CP Computer Paragraph

CPA Certified Public Accountant

CPM Civil Penalty Module

CRS Communication Replacement System

CSC Customer Service Center

CSCS Customer Service Call Sites

CSED Collection Statute Expiration Date

CSOC Customer Service Operations Center, Atlanta

CSP Classification Settlement Program

CT Criminal Tax

CTM Communications, Technology, and Media, LMSB

CTR Currency Transaction Report

CY Calendar Year

DC Division Counsel

DC District of Columbia

DFO Director, Field Operations

DIF Descriminant Function

DIO Division Information Office

DLN Document Locator Number

DP Data Processing

DTO Desk Top Operations

EEO Equal Employment Opportunity

E-FOIA Electronic FOIA Reading Room

EFTPS Electronic Federal Tax Payment System

EIN Employer Identification Number

EMIS Enforcement Management Information System

EO Exempt Organizations

EP Employee Plans

EP/EO Employee Plans/Exempt Organizations

EPMF Employee Plans Master File

EQMS Exam Quality Measurement System

EQTRAS Examination Quality Trends Analysis System

ERTA Economic Recovery Tax Act of 1981

ES Estimated Tax

ESP Examination Special Procedures (old)

ESP Examination Support and Processing (new)

ETA Electronic Tax Administration

ETE Employment Tax Examiner

EXAM Examination

FDC Fraud Detection Center

FERDI Federal Employee & Retiree Delinquency Investigations

FF Field Force

FFA Fiduciary FTD Avoidance

FFF Fraudulent Failure to File

FICA Federal Insurance Contribution Act

FIFO First-In-First-Out Inventory Method

FinDEN Financial Crimes Enforcement Network

FMS Financial Management Service

FO Facilities Operations

FOBC Facilities Operations Branch Chief

FOD Field Operations Director

FOIA Freedom of Information Act

FP Financial Products

FRB Federal Reserve Bank

FRCS Federal Reserve Communication System

FS&H Financial Services & Healthcare

FSHC Financial Services and Health Care, LMSB

FSL Federal, State and Local

FTD Federal Tax Deposit

FTF Failure to File

FTL Federal Tax Lien

FTM Fast Track Mediation

FTP Failure to Pay

FUTA Federal Unemployment Tax Act

FY Fiscal Year

GBP Good Block Proof

GCM General Counsel Memorandums

GE Government Entities

GL Government Liaison

GLD Government Liaison & Disclosure Division

GLS General Legal Services

GM Group Manager

HMC&T Heavy Manufacturing, Construction & Transportation

IAC Interagency Coordinator

IAC Interest Abatement Coordinator

ICE Informants’ Claim Examiner

IDRS Integrated Data Retrieval System

IDTCA Interest and Dividend Tax Compliance Act of 1983

IE International Examination

IFASP International Field Assistance Specialization Program

IMF Individual Master File

IMPACT Improved Penalty Administration & Compliance Tax Act of 1989

IN Inadequate Records Notice

INS Individual Nonfiler Strategy

IRA Individual Retirement Account

IRAF Individual Retirement Account File

IRC Internal Revenue Code

IRM Internal Revenue Manual

IRS Internal Revenue Service

ISP Industry Specialization Program

IT Regs Internal Revenue Regulations

ITG Indian Tribal Governments

ITIN Individual Taxpayer Identification Number

LDC Lead Development Center

LEM Law Enforcement Manual

LIFO Last-In-First-Out Inventory Method

LMQAS Line Management Quality Assurance System

LMSB Large and Mid-Size Business Operating Division

MAAP Mutually Accelerated Appeals Process

MACS Midwest Automated Compliance System

MARS Manual Accounting Replacement System

MCC Martinsburg (WV) Computing Center

MCR Master Control Records

MCT Manufacturing, Construction and Transportation, LMSB

MF Master File

MFT Master File Tax

MICRORAR Revenue Agent Report--Computer Generated

MSN Microfilm Serial Number

MSSP Market Segment Specialization Program

MSU Market Segment Understandings

NASACT National Association of State Auditors, Comptrollers, and Treasurers

NBIC National Background Investigation Center

NBTPI Nonbusiness Total Positive Income

NCC Network Control Center, Martinsburg

NMF Non-Master File

NR Natural Resources, LMSB

NTIS National Technical Information Service

OBRA'86 Omnibus Budget Reconciliation Act of 1986

OBRA'89 Omnibus Budget Reconciliation Act of 1989

OCR Optical Character Recognition

OD TAS Operating Division Taxpayer Advocate Service

ODC Ozone Depleting Chemicals

OIC Offer in Compromise

OPA Office of Penalty Administration

OSPO Office of Security and Privacy Oversight

PAS Program Analysis System

PCC Penalty Computation Code

PDT Potentially dangerous taxpayers

PHC Personal Holding Company

PIN Personal Identification Number

PINEX Penalty and Interest Notice Explanations

PLR Private Letter Ruling

PMA Program Management & Administration

PMF Payer Master File

PNP Presumptive Negligence Penalty

POA Power of Attorney

POD Post of Duty

PRP Problem Resolution Program

PSBC Personnel Services Branch Chief

PSO Personnel Services Operations

PSP Planning and Special Programs

PTIN Preparer Tax Identification Number

QAS Quality Assurance Staff

QMS Quality Measurement Section

QR Quality Review

QRDT Questionable Refund Detection Team

RA Revenue Agent

RAL Refund Anticipation Loan

RAR Revenue Agent Report

RC Reason Code

RDD Return Due Date

REIT Real Estate Investment Trust

REMIC Real Estate Mortgage Investment Conduit

RF&P Retailers, Food & Pharmaceuticals, LMSB

RFC Regulated Futures Contract

RFP Retailers, Food, and Pharmaceuticals, LMSB

RO Revenue Officer

ROFT Record of Federal Tax

RONT Record of Net Tax Liability

RP Revenue Procedure

RPC Return Preparer Coordinator

RR Revenue Ruling

RRA Restructuring and Reform Act of 1998

RRTA Railroad Retirement Tax Act

RSED Refund Statute Expiration Date

RTN Routing Transit Number

RURT Railroad Unemployment Repayment Tax

RWNS Resource Workload Management System

SA Special Agent, CI

SAC Special Agent in Charge

SB/SE Small Business/Self-Employed

SBSE Small Business & Self Employed Operating Division

SC Service Center

SC IS Service Center Information Systems

SC TAS Service Center Taxpayer Advocate Service

SCA Service Center Advice

SCCB Service Center Collection Branch

SCCF Service Center Control File

CSO Customer Service Operations

SEP Special Enforcement Program

SET Self Employment Tax

SFR Substitute for Return

SHR Strategic Human Resources

SIC Schedule Indicator Code

SP Strategic Programs

SPB Special Procedures Branch

SPC Submission Processing Center

SPEC Stakeholder Partnership, Education and Communication, W&I

SSA Social Security Administration

SSN Social Security Number

STAUP Command code which stops collection activity

TA Taxpayer Advocate

TAC Field Assistance Centers, W&I

TAM Technical Advice Memoranda

TAMRA Technical & Miscellaneous Revenue Act

TAO Taxpayer Assistance Order

TAS Taxpayer Advocate Service

TBD To Be Determined

TBOR Taxpayer Bill of Rights

TC LMSB Team Coordinator

TC Tax Court

TC Transaction Code

TCMP Taxpayer Compliance Measurement Program

TDA Taxpayer Delinquency Account

TDI Taxpayer Delinquency Investigation

TE Tax Examiner

TEC Taxpayer Education & Communication, SBSE

TEFRA Tax Equity Fiscal Responsibility Act (1982)

TEGE Tax Exempt & Governmental Entities

TFRP Trust Fund Recovery Penalty

TGR Total Gross Receipts

TIF Taxpayer Information File

TIGTA Treasury Inspector General for Tax Administration

TILT Taxpayer Inquiry Look-up

TIN Taxpayer Identification Number

TLN Transmittal Locator Number

TM Technical Memoranda

TM Territory Manager

TP Taxpayer

TPBC Transactional Processing Branch Chief

TPCO Transactional Processing Center Operations

TPI Total Positive Income

TRA'86 Tax Reform Act of 1986

TRR Tax Resolution Representatives, W&I

TT&L Treasury Tax and Loan Account

TY Tax Year

UNAX Unauthorized Access

UNISTAR Unified System for Time and Appeals Records

UPC Unpostable Code

URB Underreporter Branch

USTC United States Tax Court

W&I Wage and Investment Operating Division

WCC Workers' Compensation Center

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GLOSSARY

23C DATE: The date an assessment is posted to Master File. It is also the date the first master file notice is sent on a balance due account. Commonly referred to as the notice date or assessment date.

ABATEMENT: A reduction in the assessment of tax, penalty, or interest when it is determined the assessment is incorrect. Non-Master File abatements at the Service Center require the signature of the Certifying Officer and are supported by the legal document: Form 2188, Voucher and Schedule of Overpayment and Overassessment.

ABSTRACT NUMBER: A three-digit number which references a specific type of excise tax. The abstract number will correspond exactly with the IRS number shown on the excise tax form. For example, Form 720, Quarterly Federal Excise Tax Return, shows ship passenger tax as IRS number 29. However, it is assessed on Master File with three digits, i.e., Abstract Number 029. Note: the definition of abstract number is not limited to excise taxes; there are also abstract numbers for penalties, for example.

ABSTRACTS: Reports that identify the specific type of tax collected, corresponding to the proper appropriation account set by Congressional Act or Public Law.

ACCOUNT: A record of a taxpayer's assessments, abatements and credits. The information is maintained on magnetic tape at the Martinsburg Computing Center, and can be accessed and viewed by employees through IDRS. The records are maintained on the Active Register for three years or longer if there is activity. If there is no activity for three years, the account will be placed on the Retention Register. Taxpayers' tax data are maintained by Social Security Number (SSN)/Employer Identification Number (EIN), tax period, and MFT (for BMF accounts).

ACCRUALS: The increase of interest and penalty amounts amassed from the date an assessment is posted to an account (23C Date) to the date the amounts are paid. NOTE: TDAs and levies accumulated interest from the 23C date plus 21 days.

ADOPTION TAXPAYER IDENTIFICATION NUMBER (ATIN): An identification number assigned by the IRS for children whose adoptions are pending.

ADVANCE PAYMENT: The payment made for an anticipated deficiency prior to the actual assessment.

ADVICE OF CREDIT (AOC): The transmittal, on Treasury Form 2284, of federal taxes paid to a depository bank. The AOC includes information identifying the payor, date of payment, and amount of the deposit.

ALCOHOL, TOBACCO AND FIREARMS (AT&F): A Bureau within the Treasury Department with responsibility for monitoring the manufacture, sale, and collection of federal excise taxes on alcohol, tobacco and firearms.

ANNUAL ACCOUNTING PERIOD: The twelve consecutive month period adopted by the taxpayer for maintaining books and records and for determining a taxable year.

ASSERT: The determination that tax, penalty, or interest applies to a taxpayer account.

ASSESS: The posting of tax, penalty, and/or interest that has been determined to be due and collectable. Thus, an assessed penalty is one that is posted to the Master File account and/or on the Form 23C Assessment Certificates--Summary Record of Assessment and can be viewed on IDRS or on a Master File transcript.

ASSESSMENT DATE: The date a tax liability, with appropriate penalties and interest, becomes due and collectable. The date Form 23C is signed certifying the liability is due. The date of the first (Master File) notice.

ASSESSMENT: The amount of tax, penalties, and/or interest charged to a taxpayer's account.

Attorney-in-fact means an agent authorized by a person under a power of attorney to perform certain act(s) or kind(s) of acts for that person.

AUDIT TRAIL: Data used to track case activity to follow the development of an issue from the time it is raised to the time it is resolved. Audit trails can be used to show continuity of purpose, can support the acceptance of oral evidence for additional data, and can indicate taxpayer intent.

AUTOMATED DEPOSIT OF ELECTRONIC PAYMENTS FOR TAXES (ADEPT): A prototype system designed to process taxpayers' payments electronically through a Federal Reserve Bank (FRB) to the Andover Service Center. Only specific types of payments are included in this test, e.g., FTDs, Forms 940--Employer's Annual Federal Employment (FUTA) Tax Return, 941--Employer's Quarterly Federal Tax Return 1st Qtr., 1040ES--Estimated Tax for Individuals, and 1041--U.S. Fiduciary Income Tax Return (balance due). FTDs processed under ADEPT do not require taxpayers to use Form 8109, the Federal Tax Deposit (FTD) Coupon. Starting in February 1992, taxpayers under the ADEPT test will make their payments through TAXLINK.

AUTOMATIC ADJUSTMENT: A subsequent adjustment to an account which follows automatically from the previous, unrelated adjustment. For example, if the net income from self-employment on Form 1040 is adjusted, the taxpayer's self-employment tax is also subject to adjustment since this tax is based on the amount of self-employment income.

BALANCE DUE: The amount of tax, penalty, interest or other receivables that remain unpaid on a taxpayer's account.

BLOCK: Returns or documents that have been grouped together for processing and filing purposes. Blocks consist of up to one hundred documents.

BURDEN OF PROOF: The duty of a party to substantiate an allegation or issue either to avoid the dismissal of that issue early in the trial or to convince the "trier of facts" as to the truth of the claim and thereby prevail in a civil or criminal suit. The burden of proof may refer to the "risk of nonpersuasion" where the party carrying it will lose if the "trier of fact" in deliberating the final outcome of the case remains in doubt or is not convinced to the degree required. If, at the close of the evidence, the trier of fact is in doubt as to the facts, the decision must go against the party that had the burden of proof on the particular issue in question.

BUSINESS MASTER FILE (BMF): The files maintained by the IRS which include business transactions and accounts. These include employment taxes (Form 940, 941, CT-1, etc.), income taxes on businesses (Form 1120, 1041, etc.), use taxes (Forms 2290), wagering taxes (Forms 730, 11-C) and excise taxes (Form 720).

CAF Number is the Computer Authorization File number assigned by IRS to each representative whose power of attorney, and each designee whose tax information authorization, has been recorded onto the CAF.

CALENDAR YEAR: The twelve consecutive months beginning on January 1, and ending December 31.

CENTRALIZED AUTHORIZATION FILE (CAF) System is a computer file containing information regarding the authority of individuals appointed under powers of attorney or persons designated under the tax information authorization system. This system gives IRS personnel quicker access to authorization information.

CHARITABLE DEDUCTION PROPERTY: A taxpayer's contribution of real or personal property to a charity for which a deduction can be claimed under IRC Section 170.

CLAIM: (1) FORMAL--A request from the taxpayer on Form 843 asking that a liability previously assessed be reduced. A formal claim can also be made on an amended return, such as Form 1040X, 1120X, etc. (2) INFORMAL--A written request, other than Form 843, claim for refund and request for abatement, signed by the taxpayer, requesting changes to obtain a correct and accurate reflection of his/her tax liability.

CLEAR AND CONVINCING: A higher degree of proof than the preponderance of evidence standard for civil cases.

CLOSELY-HELD CORPORATION: A corporation in which at least 50% of the value of its outstanding stock is owned, directly or indirectly, by or for not more than 5 individuals.

COMMAND CODE (CC): A five or six character code used to access IDRS. The code is also described as an Action Code when data is entered into the system (such as CC REQ77) and an Inquiry Code when data is retrieved (such as TXMODA).

COMMERCIAL BANK ADDRESS FILE (CBAF): A computer listing of all authorized depositaries within each service center's processing area. It is updated and maintained by the FTD unit in Service Center Accounting Branch.

COMMISSIONER means the Commissioner of the Internal Revenue Service or Commission of an Operating Division.

COMPUTER PARAGRAPH NOTICE (CP): A computer generated message, resulting from an analysis of the taxpayer's account which is used to notify the taxpayer of a balance due, refund, or of no balance status, or to notify the Service that action is needed on an account.

CONTACT PERSONNEL: Any IRS employee who has direct contact with the taxpayer either on the telephone, in person, or by mail.

CYCLE: One week's processing at the service center and Martinsburg Computing Center. The cycle is expressed by a 4 digit code: the first two digits are the processing year and the last two digits are the processing week in that year. Document 6209, Section 16 provides additional information on service center processing/IDRS, and Master File posting cycles.

DEBIT BALANCE: The amount by which the balance due exceeds the total amount of credits.

DELINQUENT RETURN: A return which is filed after the prescribed due date as extended by any valid extension of time.

DISCLOSURE: Disclosure of Tax Information by Government Employees (IRC 6103):

DISHONORED CHECK: A taxpayer's check which is not accepted by the bank, either because of an encoding error or because of insufficient funds.

DISREGARD: The careless, reckless or intentional failure to heed the provisions of the Internal Revenue Code, regulations, or rulings.

DOCUMENT CODE (Doc Code): The code which identifies the specific type of return or document that was filed or processed. The document code is the fourth and fifth digits of the DLN. See Document 6209, ADP and IDRS Information 1992, Section 2 for a complete listing of these codes.

DOCUMENT LOCATOR NUMBER (DLN): A fourteen-digit identification number assigned to every return/document and entered into the ADP system that affects a taxpayer account. The DLN is used to identify and locate returns/documents for future reference.

DOCUMENT REGISTER: A numerical listing of each item in a block of returns or documents. The document register serves as a transmittal for each block of remittance returns.

DUE DATE: Date by which a return must be filed or a payment or deposit made.

DUMMY MODULE: A tax module created on IDRS in order to record information when the true tax module is not present. It contains a name control, TIN, MFT, and tax period, and will be replaced by the true module when the generated TC 902 finds a match on the Master File.

DURABLE POWER OF ATTORNEY means a power of attorney that is not subject to a time limit and that will continue in force after the incapacitation or incompetency of the grantor (the taxpayer).

EIGHTH-MONTHLY PERIODS: A period established by regulations for determining the amount and frequency of depositing federal taxes. For deposit purposes, each month is divided into eight periods ending on the 3rd, 7th, 11th, 15th, 19th, 22nd, 25th, and last day of the month. These are called eighth-monthly periods. Employers use these periods to determine if and/or when a deposit is due.

EMPLOYEE PLANS MASTER FILE (EPMF): The files maintained by the IRS which include transactions on Employee Plan accounts.

EMPLOYER IDENTIFICATION NUMBER (EIN): A nine-digit number used to identify a taxpayer's business account in a NN-NNNNNNN format.

ENROLLED AGENT means any individual who is enrolled under the provisions of Treasury Department Circular 230 to practice before the IRS.

ENTITY AREA: The portion of an input document or tax return that contains the name, address, account number, tax period and other entity data.

FEDERAL RESERVE BANK (FRB): One of 12 banks of the Federal Reserve System which verifies and classifies FTD moneys collected within its geographic jurisdiction.

FEDERAL TAX DEPOSIT (FTD): The Form 8109 or 8109B blank FTD coupon used by taxpayers to submit withheld taxes to an authorized depositary. It is also the amount of payment the employer/withholder pays with the Form 8109 or 8109B.

FIDUCIARY FTD AVOIDANCE (FFA): The penalty chargeable to third party fiduciaries who do not submit their trusts' estimated tax payments on magnetic tape through the FTD system.

FILE LOCATION CODE (FLC): The first two digits of the DLN used to identify the service center or district office that initiated a transaction. See Document 6209, Section 4.03 for a complete list of FLCs.

FINANCIAL MANAGEMENT SERVICE (FMS): The Federal agency responsible for the government's cash management program. FMS, rather than IRS, has jurisdiction over authorized financial institutions and asserts sanctions against banks and agents for misdating and mishandling FTDs.

FIRST-IN FIRST-OUT (FIFO) INVENTORY: A system of accounting for inventory costs, using the unit cost of the oldest remaining inventory to compute net profit.

FISCAL YEAR: An accounting period of 12 consecutive months other than a calendar year.

FOREIGN-CONTROLLED CORPORATION: A domestic corporation engaged in U.S. business and controlled by a foreign person.

FRAUD: The willful intent to evade tax; for example, by filing a false return or declaration.

FREEZE CODE: A condition on an account which requires additional action before the account can be settled. This could be on Master File, IDRS or AIMS. Closing actions will be prevented until the restriction (freeze code) is removed.

FRIVOLOUS: Clearly lacking in substance, or clearly insufficient as a matter of law. For example, a claim is frivolous if it clearly appears either that it is insufficient because it is not supported by the facts or that it is one for which the law recognizes no remedy.

General power of attorney means a power of attorney that authorizes the attorney-in-fact to perform any and all acts the taxpayer can perform.

GENERATED DATA: Information produced as a result of input to, or update of, IDRS or Master File.

GOVERNMENT OFFICER AND EMPLOYEE means any officer or employee of a state or the United States in the executive, legislative, or judicial branch of the government, or in any agency of the United States, including the District of Columbia.

HARD COPY: Printed output.

HARDSHIP: A hardship which is economic in nature and of such severity that the taxpayer is debilitated. As defined by Regulations Section 1.6161-1, Undue hardship is required for extension of time for payment and granted only upon showing that payment on the due date of the amount with respect to which the extension is desired will result in an undue hardship. The extension will not be granted upon a general statement of hardship. The term "undue hardship" means more than an inconvenience to the taxpayer. It must appear that substantial financial loss, for example, loss due to the sale of property at a sacrifice price, will result to the taxpayer from making payment on the due date of the amount with respect to which the extension is desired. If a market exists, the sale of property at the current market price is not ordinarily considered as resulting in an undue hardship. As defined by Regulations Section 301.6724-1(c)(3), "undue economic hardship" is established only if the filer attempts, at least 90 days before the required filing date, to contract out the magnetic media filing and is unable to do so because of prohibitive cost. Ordinarily, a filer may not claim undue economic hardship in more than one year. As defined by Regulations Section 301.7811-1T, The term "significant hardship" means a serious privation caused or about to be caused to the taxpayer as the result of the particular manner in which the internal revenue laws are being administered by the Internal Revenue Service. The term means more than financial hardship alone. Instead, even where financial hardship is involved, a finding of "significant hardship" will depend on an examination of the action taken, or to be taken, by the Internal Revenue Service which produces or would produce the financial hardship. The action or proposed action must be such that it would offend the sense of fairness of taxpayers in general were they aware of all the surrounding facts and circumstances. See (20)162 above for additional information.

INDIVIDUAL MASTER FILE (IMF): The files maintained by the IRS which include transactions on individual tax accounts. This includes the Form 1040 series, and related documents, extensions of time to file, etc.

INDIVIDUAL MASTER FILE ON LINE (IMFOL): Computer program where employee can view taxpayer’s account information on line.

INDIVIDUAL RETIREMENT ACCOUNT FILE (IRAF): The files maintained by the IRS which include transactions on Individual Retirement Accounts.

INDIVIDUAL TAXPAYER IDENTIFICATION NUMBER (ITIN): An identification number assigned to aliens who are being claimed as dependents on US tax returns.

INTEGRATED DATA RETRIEVAL SYSTEM (IDRS): A computer system capable of retrieving or updating stored information which works in conjunction with the Master File records of a taxpayer's account. This system is aimed at quick resolution of problems and queries concerning current taxpayer accounts. To be active on IDRS, the account must be in either debit or credit balance status or have recent account activity.

INTERAGENCY COORDINATOR (IAC): The designated employee in the FTD unit of the SC Accounting Branch who is a liaison between IRS, FRB, commercial banks and reporting agents.

JULIAN DATE: The numeric day of the year. Days are numbered from 001 through 365 (or 366), January 1 being 001, and continuing sequentially throughout the year. The Julian date is inflated by 400 if assigned by RPS or IDRS. The Julian date is included in the DLN as the 6th, 7th and 8th digits to show the date the transaction was effected.

LAST-IN FIRST-OUT (LIFO) INVENTORY: A system of accounting for inventory costs, using the unit cost of the most recent item in inventory to compute net profit.

LEVY: The power of distraint and seizure. Forms 668-A (Notice of Levy) and 668-W (Notice of Levy on salary and other income) serve as Notice of Levy; Form 668-B (Levy) is the Levy.

LIMITED POWER OF ATTORNEY means a power of attorney that limits the attorney-in-fact to certain specified act(s).

MASTER FILE TAX (MFT) CODE: A two digit code that identifies the type of return filed and the tax class. See Document 6209, Section 2 for a complete listing of MFTs.

MICROFILM SERIAL NUMBER (MSN): A ten digit locator number printed across each FTD and AOC processed through the Optical Character Recognition (OCR) equipment at each service center. The MSN is used to identify and/or locate individual FTD coupons.

NEGLIGENCE: Any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. OBRA '89 repealed the statutory presumption of negligence relating to failure to report certain unrecognized gains on straddles and to include dividends, interest, or other income reported on an information return. Evidence of such a failure, however, is still persuasive evidence of negligence and the taxpayer will have to show there was reasonable cause.

NET AMOUNT DUE: The amount of tax required to be shown on the return less the amount of tax which is paid on or before the date prescribed for payment and any applicable credits which may be claimed on the return.

NON-MASTER FILE: The files maintained by the IRS which include transactions on tax accounts not included on the Master File. The NMF was originally established to process transactions that could not be processed by ADP procedures.

NORMAL (LEGAL) DUE DATE: The date the IRC requires the filing of the return. If the normal or extended due date falls on a Saturday, Sunday or legal bank holiday, and the return filing occurs by the next official workday, it will be considered as filed on the due date. If granted an extension of time to file, the taxpayers are not liable for the FTF penalty for the duration of the extension period. NOTE: An automatically-granted or approved extension of time to file a return does not extend the time to pay the tax.

OFFER-IN-COMPROMISE: A contract between the taxpayer and the government to settle a tax liability for an amount less than the assessed tax, penalty, and interest.

OMNIBUS BUDGET RECONCILIATION ACT OF 1986 (OBRA '86): A Public Law which made significant changes to the tax law, many of which affected rates and amounts of assessed penalties. (P.L. 99-509)

OMNIBUS BUDGET RECONCILIATION ACT OF 1989 (OBRA '89): A Public Law which made extensive changes in the application of penalties. (P.L. 101-239)

ORAL EVIDENCE: Non-written information received from the taxpayer, authorized representative or other third party, providing additional facts or requesting reasonable cause penalty abatement. Oral evidence can be considered once the taxpayer's credibility has been established in the course of the contact. See IRM (20)401.5:(1)(a) for additional information on acceptable oral evidence.

ORDINARY BUSINESS CARE AND PRUDENCE: A standard which requires that the taxpayer be aware of his tax obligations. A taxpayer fails to document that he exercised ordinary business care and prudence if he was careless or forgetful in meeting tax deposit, filing, payment, or reporting requirements. In general, the taxpayer uses the same care in meeting federal tax obligations as he/she uses in maintaining other business records or meeting other business obligations.

PENALTY COMPUTATION CODE (PCC): A two-digit code which is used to denote the reasons why, or methods by which, a FTD penalty was charged.

PENALTY PERIOD: The time for which a penalty is applicable. As an example, the penalty period for a delinquent return is from the due date of the return to the date the return was received.

PENALTY: A sanction to promote voluntary compliance of the tax laws.

PENDING TRANSACTION: A transaction entered into IDRS which has not yet posted to the Master File. Pending transactions will affect the IDRS account balance, but will not change the Master File account balance.

PERIOD ENDING: The ending year and month indicating the period covered by a tax return. For example, 8609 tax period ending indicates a return for the period ended the ninth month of 1986, or September 30, 1986. For the Automated NMF system, a six digit field in a MMDDYY format is used.

PINEX: An IDRS computer program used to produce penalty and interest explanations for taxpayers.

POST ASSESSMENT APPEAL: An appeal of tax, penalty and/or interest made by the taxpayer after the tax and/or penalty has been assessed.

POSTED TRANSACTION: A transaction that has been accepted onto the Master File. The Master File checks pending transactions to assure consistency and accuracy before allowing them to be entered onto it.

PRACTITIONER generally means only an attorney, CPA, enrolled agent, or enrolled actuary authorized to practice before the IRS. However, as to practice by former government employees, their partners, and their associates, "practitioner" also includes any other person authorized to practice before the IRS.

PREPAID CREDITS: Payments of tax, such as withholding, estimated payments, etc., made prior to the due date of the return, but neither applied to a tax liability nor refunded to the taxpayer prior to the return posting to the Master File. These credits include frozen refunds from a filed return and prepayment credits for an unfiled return. Prepaid credits do not include advance payments, cash bonds, or amounts applied from other tax liabilities subsequent to the due date of the return for which the penalty applies.

PREPONDERANCE OF THE EVIDENCE: The amount and quality of evidence necessary for a civil case to be won. It is that degree of proof which makes a position more probable than not.

PRESCRIBED DUE DATE: The due date designated for filing a return, including any extension of time for filing.

PRESUMPTIVE DUE DATE: The due date designated for filing a return, not taking into account any extensions.

PRESUMPTIVE NEGLIGENCE: An automatic assumption that negligence exists if a taxpayer's account fits within a given range of facts and circumstances. Section 6653(g) of the IRC imposed a presumptive negligence penalty on taxpayers who fail to report interest and dividend payments on information returns. The Tax Reform Act of 1986 expanded this provision to include any item reported on an information return. Under this provision it is presumed that this failure is a result of negligence unless the taxpayer can show, by clear and convincing evidence, the absence of negligence. The presumptive aspect of negligence was repealed by OBRA '89 for years beginning after December 31, 1989.

PROBLEM RESOLUTION PROGRAM (PRP): A program within the IRS to which taxpayers' problems can be referred if they cannot be resolved by normal procedures. New name Taxpayer Advocate (TA).

PROPERTY: Something owned, such as land, goods, inventory, money, etc. Property is classified as either tangible property, such as land, fixtures, buildings, inventory and equipment, and intangible property, such as leaseholds, patents, good will, and contract rights.

QUALIFIED AMENDED RETURN: An amended return filed after the due date but before the taxpayer is first contacted concerning an examination.

REASON CODE: A two-digit code used when adjusting an account to denote which item on the tax return is affected by the adjustment. Up to four reason codes can be entered for each adjustment transaction. Use Reason Code 62 to denote reasonable cause consideration.

REBATE: A credit, refund or other repayment where too much tax was paid.

RECEIVED DATE: (1) Timely filed return--the original or extended due date of the return.

RECORD OF FEDERAL TAX (ROFT): The portion of the return in which the taxpayer is to list periodic tax liability.

RECORD OF NET TAX LIABILITY (RONT): The portion of an excise tax return in which the taxpayer is to list the net periodic tax liability.

REFILE DLN: A new DLN assigned to a return or other document after an audit or tax adjustment has been completed. The tax return and related documents are filed under this refile DLN.

REFUND: Money returned to the taxpayer as a result of overpayment of a tax liability.

REJECT: A return or document determined to be unprocessable because of missing data, erroneous blocking, or incomplete information. The document is coded in the service center Returns Analysis unit to reject and is placed on reject registers for correction by error resolution tax examiners.

REMITTANCE AMOUNT: The amount of money received in payment of a liability. This remittance may be by check, money order, cashier's check, or cash.

SAFE HAVEN RULE: A rule intended to help small employers avoid FTD penalty liabilities by allowing them to pay a portion of their liability during the quarter, and the remaining tax at a later date. For Form 941 and 943 the portion to be paid is 95%, Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, has a 90% Safe Haven Rule, and Form 720 uses a 1/6th Safe Haven Rule.

SCHEDULE INDICATOR CODE: One of the five numeric codes edited onto BMF returns during return processing.

SECTION 444 ELECTION: An election by an S-Corporation, Personal Service Corporation, or Partnership to choose a tax year other than a calendar year tax period. The election must comply with requirements under IRC section 444.

SECURED DELINQUENT RETURN: A return secured after a taxpayer has been contacted by the Service but prior to an assessment made under Substitute for Return procedures.

SEIZED PROPERTY: Assets which have been confiscated to satisfy federal tax obligations.

SERVICE CENTER CONTROL FILE (SCCF): A magnetic tape control system record the receipt of returns/documents, to trace their progress through the processing system and finally to verify that all items have been completed. The SCCF systems maintain separate totals for revenue receipts and other items.

SOCIAL SECURITY NUMBER: A nine digit number used to identify an individual taxpayer account, in NNN-NN-NNNN format.

SOURCE DOCUMENT: Backup documentation used by Service personnel to explain an adjustment to a taxpayer's account; for example, taxpayer correspondence.

STATUS CODE: A two-digit numeric code indicating the Master File and/or IDRS status of a tax module. For example, Status 58 is an accelerated TDA.

STATUTE OF LIMITATIONS: A set of rules specifying the period in which actions may occur, or within which rights may be enforced. See IRM (20)150 above.

STRADDLE: Offsetting positions with respect to personal property. A straddle is made up of one or more long positions offset by one or more short positions. See IRM (20)511.22.

SUBSEQUENT PAYMENT: A payment received for an account that has been assessed and for which the taxpayer has been billed.

SUBSTANTIAL AUTHORITY: The objective determination that a position taken by a taxpayer is supportable. In determining whether there is substantial authority for the taxpayer's treatment of an item, the only authorities to be considered are those existing at the time the return containing the item was filed or the last day of the taxable year to which the item relates. There is substantial authority for the tax treatment of an item only if the weight of the authorities supporting the treatment of an item is substantial in relation to the weight of authorities supporting contrary positions. All authorities relevant to the tax treatment of an item, including the authorities contrary to such treatment, are taken into account in determining whether substantial authority exists; the weight of those authorities is determined in light of the pertinent facts and circumstances. There may be substantial authority for more than one position with respect to the same item. The taxpayer's belief that the authorities with respect to the tax treatment of an item constitute substantial authority is not taken into account in determining whether there is substantial authority. (See IRM (20)510, Accuracy-Related Penalty)

SUBSTITUTE FOR RETURN (SFR): A blank Form 1040 on which the revenue agent places the taxpayer's name, address and TIN, but no other tax information. Its purpose is not to calculate a tax, but rather to facilitate the Service's processing procedures. See Phillips v. Commissioner, 86 T.C. 433 (1986). The SFR program, under IRC 6212, (IMF-Form 1040 series) uses Statutory Notice of Deficiency procedures, e.g., 30 Day Letter and 90 Day Letter, to provide the taxpayer appeal rights during this process. The term "6020(b) Program" refers to BMF processing (Forms 940 series and Form 1065 U.S. Partnership Return of Income). Employment taxes fall under IRC 6020(b), using Letters 1085 and 1016 to allow appeals during this process.

SUPERSEDING RETURN: An amended return filed on or before the return due date.

TAX CLASS: A one digit code which identifies the type of tax involved in a transaction. The Tax Class code, in combination with the Document Code, can be used to identify the specific form of the transaction. Tax Class is the third character of the DLN. See Document 6209, ADP and IDRS Information, Section 2 for a complete list.

TAX MODULE: A record of one account for one taxpayer covering one type of tax for one tax period. The tax module contains taxpayer identification information, every assessment and/or abatement posted to the account, a record of credits and payments, and, on IDRS, may include a brief history section.

TAX PERIOD: The period of time for which a return is filed. A four digit code is used to indicate the tax period for a given return. As an example, 8603 indicates a tax period that ended in the third month of 1986. Most tax periods are referred to by the ending date, thus the first quarter 941 for 1991 is written 9103. However, taxes on Form 11C, Stamp Taxes, and Form 2290, Use Tax Return, use tax period beginning dates.

TAXPAYER BILL OF RIGHTS 2 (TBOR2): Bill passed in 1996 to extend taxpayer’s rights.

TAXPAYER DELINQUENT ACCOUNT (TDA): An internal computer notice indicating the taxpayer has not responded to prior balance due notices or paid a balance due. The TDA is preceded by a number of notices to the taxpayer indicating a balance due is outstanding. The TDA is assigned to an employee in the Collection function for personal contact and/or consideration of enforcement action to pay the liability.

TAXPAYER IDENTIFICATION NUMBER (TIN): A nine digit number assigned to taxpayers for identification purposes. Depending on the nature of the taxpayer, the TIN is either an Employer Identification Number (EIN) or a Social Security Number (SSN).

TAXPAYER INFORMATION FILE (TIF): The IDRS file which contains entity and module information.

The making known to any person, in any manner whatever, a return or return information, by officers, employees of the U.S., states and certain other individuals who have such information. Unauthorized disclosure can result in serious consequences for all parties. Taxpayer Disclosure of a Nonfrivolous Position (IRC 6664(c)): The disclosure provision provides a means for avoiding some or all of both the negligence and substantial understatement penalties. To avoid the negligence penalty, by making a qualifying disclosure of a nonfrivolous position, the taxpayer is satisfying its reasonable cause exception. For the substantial understatement penalty, a qualifying disclosure of a nonfrivolous position serves to reduce the amount of the understatement. Avoiding imposition of a penalty by disclosure is derived from the substantial understatement penalty of former IRC section 6661. See IRM (20)433:(1) for further discussion.

TIMELY FILED: A return or document which was filed by the taxpayer and received by the Service within specified time frames. A return is timely filed if postmarked by the original or extended due date (Rev. Rul. 73-133). EXCEPTION: If the return is delinquent, the timely filed date is the date received by the IRS not the date postmarked.

TOLERANCE: The allowable deviation from standard in order to facilitate administration of a program. A tolerance can take the form of a dollar amount or a time allowance.

TRANSACTION CODE (TC): A three-digit code that identifies a specific action on a taxpayer's account. Document 6209, ADP and IDRS Information, Section 8.01 contains a complete listing of TCs.

TRANSMITTAL LOCATOR NUMBER (TLN): The number assigned to a block of FTDs, similar to a DLN. It denotes the service center, FRB, depositary bank, and bank branch which processed the FTDs. It is displayed above the bank name on Treasury Form 2284, Advice of Credit.

TREASURY TAX AND LOAN ACCOUNT (TTL): The depositary used to credit FTD moneys to the Treasury. TTL is also the account to which penalties are charged against banks for bypassing or improperly using the FTD system.

UNDERPAYMENT: The amount by which any tax imposed exceeds the tax shown by the taxpayer on the return, plus amounts previously assessed (or collected without assessment) before the return was filed in excess of any rebate. Except in the case of a qualified amended return, amounts assessed after the return is filed are not taken into account in computing the underpayment. For returns due before 1/1/90, underpayment generally means the deficiency.

UNDUE HARDSHIP: See Hardship above.

VOLUNTARY COMPLIANCE: Taxpayers who freely obey the tax laws. Compliance is defined in the IRC as: (a) filing accurate and complete returns on time, (b) paying amounts due, and (c) reporting information required.

WAIVE: To relinquish voluntarily. In terms of penalty procedures, "waive" also means to determine that no penalty is appropriate, e.g., the taxpayer possessed reasonable cause and good faith as to the failure or inaccuracy.

WILLFUL NEGLECT: Conscious, intentional failure to comply with the provisions of the IRC, or reckless indifference to such provisions.

FINAL NOTICE. 30 day notice to pay before Enforcement Action begins.

UR. Underreporter Program

Payer. Employer