The Glossary contains information about selected terms and concepts used in the IRS Data Book. It is intended to further the reader’s understanding of the terms used and provide direct links to the respective tables containing this information.
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Abatement of civil penalty (Table 17)—A reduction of an assessed civil penalty. The IRS may approve an abatement of a penalty for: IRS error; reasonable cause; administrative and collection costs not warranting collection of penalty; discharge of penalty in bankruptcy; and the IRS’s acceptance of partial payment of assessed penalty. For more information see Civil penalties.
Adjusted gross income (Table 9b)—Total individual income, as defined by the Internal Revenue Code, less statutory adjustments—primarily business, investment, and certain other deductions.
Appeals (Table 21)—The Appeals mission is to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the taxpayer and the Federal Government. The Appeals Office considers cases that involve examination, collection, and penalty issues. Taxpayers who disagree with the IRS findings in their cases may request an Appeals hearing. The local Appeals Office is separate and independent of the IRS office that proposed the tax adjustment, collection action, or penalty. For more information see Appeals.
Automated Substitute for Return Program (Tables 9b and 14)—Under this program, the IRS uses information returns from third parties (such as Forms W-2 and 1099) to identify tax return delinquencies (nonfilers), constructs tax returns for certain nonfilers based on that third-party information, and assesses tax, interest, and penalties based on the substitute returns.
Automated Underreporter Program (Table 14)—Under this program, the IRS uses information returns from third parties (such as Forms W-2 and 1099) to identify unreported income on returns filed by taxpayers.
Average positions realized (Tables 29 and 30)—Represents the average number of full-time equivalent (FTE) positions actually used to conduct IRS operations. Excludes positions funded by reimbursements from other Federal agencies and private entities performed by these external parties. In contrast, IRS labor force represents the total number of persons, including full-time, part-time, and seasonal workers, employed during the fiscal year.
Business Systems Modernization appropriation (Table 28)—Funds the capital asset acquisition of information technology systems.
Chief Counsel (Tables 26 and 27)—The IRS Chief Counsel is appointed by the President of the United States, with the advice and consent of the U.S. Senate, and serves as the chief legal advisor to the IRS Commissioner on matters pertaining to the interpretation, administration, and enforcement of the Internal Revenue Code, as well as all other legal matters. Under the IRS Restructuring and Reform Act of 1998, the Chief Counsel reports to both the IRS Commissioner and the Treasury General Counsel. Attorneys in the Chief Counsel’s Office serve as lawyers for the IRS. They provide guidance to the IRS and to taxpayers on the correct legal interpretation of Federal tax laws, represent the IRS in litigation, and provide all other legal support the IRS needs to carry out its mission.
Chief Counsel guidance and assistance (Table 26)—Includes published guidance; advanced case resolution; treaties; legislation; Congressional and executive correspondence; training and public outreach; and prefiling legal advice to the IRS. For more information see IRS Chief Counsel.
Chief Counsel tax law enforcement and litigation (Table 26)—Includes Tax Court litigation; collection, bankruptcy, and summons advice and litigation; Appellate Court litigation; criminal tax; and enforcement advice and assistance. For more information see IRS Chief Counsel.
Child Tax Credit (Tables 7, 8, and 15)—There are two parts of the Child Tax Credit: the Child Tax Credit and the Additional Child Tax Credit. The Child Tax Credit is a credit that may reduce tax by as much as $1,000 for each qualifying child. The Additional Child Tax Credit, which may be refundable, is a credit for certain individuals who get less than the full amount of the child tax credit. For more information see Child tax credit.
Civil penalties (Table 17)—The failure to comply with Federal tax laws may result in civil penalties. Civil penalties are generally payable upon notice and demand and are generally assessed, collected, and paid in the same manner as taxes. For more information see Penalties.
Closures of applications for tax-exempt status (Table 24)—Reflects all case closures for the Exempt Organizations Determinations function. These include not only initial applications for tax-exempt status, but also other determinations, such as public charity and private foundation status determinations, advance approval of scholarship grant procedures, and group determinations of tax-exempt status. Not all organizations described in section 501(c)(3) must apply for tax-exempt status, including churches, interchurch organizations of local units of a church, integrated auxiliaries of a church, conventions or associations of churches, and organizations (other than private foundations as described in section 509(a)) that have normal gross receipts in each taxable year of not more than $5,000. In addition, organizations may be recognized as tax-exempt under section 501(c)(3) without filing an application if they are included in a group exemption letter given to an affiliated parent organization.
Collection Appeals Program case (Table 21)—Provides the taxpayer, or a third party whose property is subject to a collection action, an administrative appeal for certain collection actions, including levy or seizure action that was or will be taken, Notice of Federal tax lien that was or will be filed, and rejected or terminated installment agreements. For more information see Appeals.
Collection Due Process case in Appeals (Table 21)—A case where a taxpayer requested a hearing with an independent Collection Due Process (CDP) officer in response to a notice of Federal tax lien or notice of intent to levy. The CDP hearing provides the taxpayer an opportunity, early in the collection process, to work with an independent hearing officer to resolve the collection of the taxpayer’s liability. For more information see Appeals.
Collection Due Process Timeliness Determination case in Appeals (Table 21)—When a taxpayer’s request for a Collection Due Process hearing or an equivalent hearing is not received timely or the request cannot be processed, Appeals may review the request and make a separate timeliness determination. For more information see Appeals.
Coordinated Industry case in Appeals (Table 21)—A Coordinated Industry Case (CIC) designation may be assigned to a large corporate taxpayer based on factors such as the taxpayer’s gross assets, gross receipts, operating entities, industries, and/or foreign assets. A CIC taxpayer may appeal the findings of the examination conducted by the IRS. For more information see Appeals.
Criminal Investigation Program (Table 18)—Criminal Investigation serves the American public by investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law. The three major areas of investigation are Legal Source Tax Crimes Program, Illegal Source Financial Crimes Program, and Narcotics-Related Financial Crimes Program. For more information see Criminal Investigation.
Defined benefit retirement plan (Table 23)—A retirement plan that does not maintain individual account balances that reflect the accrued benefits of each plan participant. Instead, the accrued benefit is determined by a formula stated in the plan. For more information see Defined benefit plan.
Defined contribution retirement plan (Table 23)—A retirement plan that provides an individual account for each participant. Benefits are based solely on amounts contributed to the participant’s account and any earnings on these contributions. Types of defined contribution plans include profit sharing, stock bonus, money purchases, target benefit, leveraged employee stock ownership plan, and nonleveraged employee stock ownership plan.
Delinquency Investigation (Table 16)—An investigation opened by the Collections Division when a taxpayer does not respond to an IRS notice of a delinquent return.
Disaster incidents (Table 19)—Reflects events for which the Federal Emergency Management Agency designated as major disaster areas and the IRS granted administrative tax relief.
Disclosure authorizations (Table 19)—Eligible tax practitioners may electronically request authorization to receive a client’s tax account information or to represent the client before the IRS. This e-service expedites processing and issues a real-time acknowledgment of accepted submissions.
Earned Income Tax Credit (Tables 7, 8, 9a, 10, 11, 12, 15, and 20)—A tax credit for eligible people who work and have income less than specified amounts. The amount of the credit is based on income, filing status, and number of qualifying children, if any. For more information see Earned Income Tax Credit (EITC).
Electronic Filing Personal Identification (PIN) Number (Table 19)—Can be used in lieu of the prior-year adjusted gross income to verify a taxpayer's identify for electronic filing. For more information see Electronic Filing Personal Identification (PIN) Number.
Employee retirement plan determination letters (Table 23)—Provides information about applications for determination of tax-exempt status for employee retirement plans.
Enforcement appropriation (Table 28)—Funds activities to determine and collect owed taxes, to provide legal and litigation support, to conduct criminal investigations, to enforce criminal statutes related to violations of internal revenue laws, and to purchase and hire passenger motor vehicles.
Examination (Tables 9a, 9b, 10, 11, 12, and 20)—An IRS examination (audit) is a review of an organization's or individual's accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate. For more information see Publication 3498, The Examination Process (PDF).
Examination case in Appeals (Table 21)—Involves issues in dispute by the taxpayer relating to income tax, employment tax, excise tax, estate tax, gift tax, or tax-exempt status. For more information see Appeals.
Field examinations (Tables 9a, 10, 11, and 12)—Examinations (audits) generally performed in person by revenue agents, tax compliance officers, tax examiners, and revenue officer examiners. However, some field examination cases may ultimately be conducted through correspondence in order to better serve the taxpayer. For more information see Examination.
Fiscal year for the Federal Government—Begins on October 1 of the previous year and ends with September 30 of the year with which it is numbered, e.g., Fiscal Year 2013 extended from October 1, 2012, through September 30, 2013.
Free File (Table 4)—Includes two Free File income tax preparation and electronic filing options: (1) All taxpayers could use Free File Fillable Forms, an electronic version of paper returns that performs simple mathematical calculations; and (2) Taxpayers with adjusted gross incomes of $58,000 or less could prepare and file their taxes using commercial online software provided though a partnership between the Internal Revenue Service and Free File Alliance, LLC, a group of private sector tax software companies. The Free File Fillable Forms and Free File commercial online software are both available through IRS.gov. For more information see Free File.
Full-time equivalent positions (Table 14)—Reflects the total staff hours expended, converted to the number of full-time positions.
Gross collections (Tables 1, 5, 6, and 29)—Collections before refunds and credits to taxpayer accounts have been made. IRS gross collections exclude excise taxes paid to the Alcohol and Tobacco Tax and Trade Bureau and to the U.S. Customs and Border Protection.
Illegal Source Financial Crimes Program (Table 18)—Under this program, IRS Criminal Investigation identifies, investigates, and assists in the prosecution of crimes involving proceeds derived from illegal sources other than narcotics. These encompass all tax and tax-related violations, as well as money-laundering and currency violations under the following statutes: Title 26 (tax violations); Title 18 (tax-related and money-laundering violations); and Title 31 (currency violations) of the U.S. Code. The utilization of forfeiture statutes to deprive individuals and organizations of illegally obtained assets is also linked to the investigation of criminal charges within this program. For more information see Illegal Source Financial Crimes Program.
Industry case in Appeals (Table 21)—An Industry case is any type of case that is not designated as a Coordinated Industry Case (CIC). An industry case taxpayer may appeal the findings of an examination conducted by the IRS. For more information see Coordinated Industry case.
Information returns (Table 14)—Taxpayer information from information return forms and schedules is matched to that reported on income tax returns under the Automated Underreporter Program and the Automated Substitute for Return Program. Includes Forms 1042–S (foreign person’s U.S. source income subject to withholding); the Form 1098 series (including mortgage interest, student loan interest, and tuition payments); the Form 1099 series (including interest and dividend distributions); the Form 5498 series (including individual retirement arrangement and medical savings account information); Forms W–2 (wage and tax statements); Forms W–2G (certain gambling winnings); and Schedules K–1 (partnership, S corporation, and estate or trust distributions). Information from these forms and schedules is matched to that reported on income tax returns.
Injured spouse (Table 20)—The spouse whose portion of a joint income tax overpayment was or will be used to offset a tax or nontax debt for which he/she is not liable.
Innocent Spouse case in Appeals (Table 21)—A case in which a taxpayer who filed a joint return with a spouse or ex-spouse may apply for relief of tax, interest, and penalties if he/she meets specific requirements. An Innocent Spouse case in Appeals is one in which the taxpayer requested and was denied innocent spouse relief by the IRS. For more information see Appeals.
Internal Revenue Service labor force (Table 31)—Includes total full-time, part-time, and seasonal personnel employed by the Internal Revenue Service, including IRS Chief Counsel, during the fiscal year.
Legal Source Tax Crimes Program (Table 18)—Under this program, IRS Criminal Investigation identifies, investigates, and assists in the prosecution of crimes involving legal industries, legal occupations, and, more specifically, legally earned income associated with the violation of Title 26 (tax violations) and Title 18 (tax-related violations) of the U.S. Code. The Legal Source Tax Crimes Program also includes those cases that threaten the tax system, such as Questionable Refund Program cases, unscrupulous return preparers, and frivolous filers/nonfilers who challenge the legality of the filing requirements. Excise tax and employment tax cases are also important elements of the Legal Source Tax Crimes Program. For more information see Legal Source Tax Crimes Program.
Leveraged employee stock ownership retirement plan (Table 23)—A defined contribution retirement plan in which a company leverages its credit to borrow money to fund the retirement plan. The company uses the borrowed funds to purchase shares from the company’s treasury for the retirement plan and makes annual contributions to repay the original loan. For more information see Defined contribution retirement plan.
Math error (Table 15)—Includes a variety of conditions such as computational errors, incorrectly transcribed values, and omitted entries identified during the processing of tax returns.
Money purchase retirement plan (Table 23)—A defined contribution retirement plan under which employer contributions are based on a fixed percentage of compensation. Contributions are required every year, regardless of earnings and profits. For more information see Defined contribution retirement plan and Money purchase retirement plan information.
Narcotics-Related Financial Crimes Program (Table 18)—Under this program, IRS Criminal Investigation seeks to identify, investigate, and assist in the prosecution of the most significant narcotics-related tax and money-laundering offenders. The IRS derives authority for this program from the statutes for which it has jurisdiction: Title 26 (tax violations); Title 18 (tax-related and money-laundering violations); and Title 31 (currency violations) of the U.S. Code. IRS Criminal Investigation also devotes resources to high-level multiagency narcotics investigations warranting Organized Crime Drug Enforcement Task Force (OCDETF) designation in accordance with OCDETF Program reimbursable funding. For more information, see Narcotics-Related Financial Crimes Program.
Nonleveraged employee stock ownership retirement plan (Table 23)—A defined contribution retirement plan in which a company contributes either cash to purchase outstanding shares of company stock or contributes a certain amount of shares from the company’s treasury to employee accounts. For more information see Defined contribution retirement plan.
Nontaxable returns (Table 9a)—Returns filed for entities that generally do not have a tax liability, but pass through any profits and losses to the underlying owners who include these profits or losses on their income tax returns. These entities include most partnerships and S corporations, along with nontaxable estate and trusts (fiduciaries), domestic international sales corporations, and real estate mortgage investment conduits.
Offer in Compromise (Table 16)—A proposal by a taxpayer to the Federal Government that would settle a tax liability for payment of less than the full amount owed. Absent special circumstances, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement.
Office of Professional Responsibility case in Appeals (Table 21)—A tax professional may appeal the findings of the IRS Office of Professional Responsibility (OPR). OPR has oversight responsibility for tax professionals and investigates allegations of misconduct and negligence against attorneys, certified public accountants, enrolled agents, and other practitioners representing taxpayers before the IRS. In addition, IRS e-file applicants and providers may request an administrative review when the applicant is denied participation in IRS e-file or the provider is sanctioned while participating in IRS e-file. For more information see Appeals.
Online e-file (Table 4)—A filing option that allows taxpayers to prepare and file tax returns using a personal computer. Online returns can be filed through one of two processes: taxpayers either complete a tax return on a Website without downloading any software, or taxpayers purchase and load software onto their personal computers, prepare their returns, and transmit them to the IRS through an online filing company.
Operations Support appropriation (Table 28)—Funds activities to support taxpayer services and enforcement programs, including rent, facilities services, maintenance, printing, postage, security, and other IRS-wide administration activities; research and statistics of income; telecommunications; and information technology development.
Penalty Appeals case (Table 21)—A case in which the taxpayer requests abatement of a civil penalty that was assessed before the taxpayer was given an opportunity to dispute the penalty. The taxpayer may submit a written request for abatement of the penalty, and if the request is denied, the taxpayer may appeal. For more information see Appeals.
Profit-sharing retirement plan (Table 23)—A defined contribution retirement plan that gives employees a share in the profits of the company. Contributions to employee retirement accounts are determined as a percentage of annual company profits. For more information see Defined contribution retirement plan and Profit sharing retirement plan.
Protection of the revenue base (Table 11)—Comprises any action taken by the IRS to prevent the release of funds from the U.S. Treasury in response to taxpayer efforts to recoup all, or part, of previously assessed and paid tax.
Refund cases in Chief Counsel (Table 27)—These cases involve taxpayers seeking refunds of claimed overpayments after taxes have been fully paid.
Stock bonus retirement plan (Table 23)—A defined contribution retirement plan that is funded by an employer’s contributions of corporate stock to the retirement plan. For more information see Defined contribution retirement plan.
Target benefit retirement plan (Table 23)—A defined contribution retirement plan similar to a defined benefit plan since employer contributions, which are mandatory, are based on projected retirement benefits. However, unlike a defined benefit retirement plan, the benefits provided to participants at retirement are based on the performance of the investments, and are therefore not guaranteed. For more information see Defined contribution retirement plan.
Targeted disability (Table 31)—This term was originally enacted by the Equal Employment Opportunity Commission (EEOC) in 1979 and refers to certain disabilities that have been identified for emphasis in Federal affirmative employment planning.
Tax Counseling for the Elderly (TCE) Program (Table 19)—Provides free tax help and free electronic filing for people aged 60 and older. IRS-certified volunteers from nonprofit organizations provide free tax counseling and basic income tax return preparation for senior citizens. Volunteers who provide tax counseling are often retired individuals associated with nonprofit organizations that receive grants from the IRS. For more information see TCE and VITA programs.
Tax Court case (Table 27)—A case that involves a taxpayer contesting the Internal Revenue Service’s determination that the taxpayer owes additional tax. The Tax Court provides a forum for a taxpayer to request a determination of the deficiency prior to paying the tax allegedly owed. For more information see Chief Counsel.
Taxpayer Advocate Service (Table 20)—An independent organization within the IRS that helps taxpayers resolve problems with the IRS and recommends changes that will prevent problems in the future. For more information see Taxpayer Advocate Service.
Taxpayer Assistance Centers (Table 19)—These centers are a source for personal tax help when taxpayers believe a tax issue cannot be handled online or by phone, and they want face-to-face assistance. Complementing 24/7 access to tax forms and information online at IRS.gov and the convenience of toll-free telephone assistance, Taxpayer Assistance Centers are an option when taxpayers want to talk with the IRS in person. For more information see Taxpayer Assistance Centers.
Taxpayer Assistance Orders (Table 20)—Issued by the Taxpayer Advocate Service on behalf of taxpayers, Taxpayer Assistance Orders (TAOs) direct an IRS organizational unit to take a specific action or to review, expedite consideration of, or reconsider a taxpayer’s case. However, in the majority of cases, the Taxpayer Advocate Service can resolve taxpayers’ issues without issuing TAOs.
Taxpayer Services appropriation (Table 28)—Funds prefiling assistance and education, filing and account services, and taxpayer advocacy services.
Total gross receipts (Tables 9a, 10, 11, and 12)—The sum of gross receipts from farm and nonfarm businesses calculated by adding the positive values of gross receipts and other income from Schedule C and gross income (which can be positive or negative) from Schedule F. Schedule C is used to report profit or loss from nonfarm sole proprietorships. Schedule F is used to report profit or loss from farming. If a taxpayer reports both farm and nonfarm income, the return is classified by the larger source of income.
Total positive income (Tables 9a, 10, 11, and 12)—In general, total positive income is the sum of all positive amounts shown for the various sources of income reported on an individual income tax return and, thus, excludes losses.
Total yield from unpaid assessments (Table 16)—Includes amounts collected through collection activity on previously unpaid assessed taxes plus assessed and accrued penalties and interest. Assessed tax may result from voluntarily filed returns, examinations of taxpayers’ returns, or a combination of both.
Transcript Delivery System (Table 19)—Enables authorized tax practitioners to order tax account, tax return transcript, and other tax information for their business and individual clients. These documents are returned to the practitioner’s computer through a secure online connection within minutes of the request.
Trust Fund Recovery Penalty case in Appeals (Table 21)—An employer is required to pay trust fund taxes to the U.S. Treasury through Federal Tax Deposits. Withheld income and employment taxes, including Social Security taxes, railroad retirement taxes, or collected excise taxes, are collectively called trust fund taxes because employers actually hold the employee's money in trust until they make a Federal tax deposit in that amount. A Trust Fund Recovery Penalty applies to the responsible person(s) for the total amount of trust fund taxes evaded, not collected, or not accounted for and not paid to the U.S. Treasury. The taxpayer may appeal Collection’s determination. For more information see Appeals and Trust fund recovery penalty.
Volunteer Income Tax Assistance (VITA) Program (Table 19)—Offers free tax help and free electronic filing for people who make $52,000 or less and need assistance in preparing their own tax returns. IRS-certified volunteers sponsored by various organizations receive training to help prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. For more information see TCE and VITA programs.
Website usage (Table 19)—IRS online assistance for individual taxpayers are reported is visits, page views, and downloads. A Website visit is a session that begins when a user views his or her first Web page and ends when the user leaves the IRS.gov Website. Users may access multiple Web pages during a single visit to the IRS Web site. These are counted as page views. A download is the process of copying a file, such as Form 1040, from the IRS.gov Web site to the user’s personal computer.