IRS TCO flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Gross income definition

All income from whatever source derived unless specifically excluded by the Internal Revenue Code. Exclusions must be found in the statute.

Filing status determination date

Filing status is based on marital status on the last day of the tax year, not on the date a return is prepared or filed.

Marginal tax bracket mechanics

Tax equals the sum of income slices taxed at each bracket rate. The top rate applies only to income above the bracket threshold.

Additional child tax credit

The refundable portion of the child tax credit, computed on Schedule 8812 based on earned income above a threshold amount.

Self-employment tax rate

15.3% on net self-employment earnings up to the Social Security wage base, plus 2.9% Medicare above it. Half is deductible.

Estimated tax safe harbor

Quarterly payments are required when tax liability minus withholding is $1,000 or more. Underpayment penalties are computed by quarter on Form 2210.

Long-term capital gain rates

Gains on assets held more than one year are taxed at 0%, 15%, or 20% depending on taxable income thresholds, rather than ordinary rates.

Section 274(d) substantiation

Contemporaneous records are required for travel, gifts, and listed property. Without adequate records, no deduction is allowed even if the expense occurred.

Standard deduction add-ons

Additional standard deduction amounts apply for taxpayers age 65 or older or blind. The addition is per person, not per return.

Taxpayer Bill of Rights

Ten statutory rights under IRC 7803(a)(3), including rights to be informed, to quality service, to appeal, to privacy, and to a fair tax system.

Ninety-day letter

A statutory notice of deficiency giving the taxpayer 90 days (150 if outside the US) to petition the Tax Court before assessment.

Collection Due Process hearing

Triggered by a filed NFTL or final levy notice. The taxpayer has 30 days to request a hearing, followed by Tax Court review.

Taxpayer Advocate Service

An independent IRS office that assists taxpayers facing significant hardship or systemic problems after normal channels have failed.

First-time abatement

Administrative penalty relief for failure-to-file, failure-to-pay, and failure-to-deposit penalties when the taxpayer has a clean prior compliance history.

Innocent spouse relief tracks

Three options under IRC 6015: traditional relief, separation of liability, and equitable relief. Each has distinct eligibility and time limits.

Examination types

Correspondence, office, and field examinations. Taxpayers may request IRS Independent Office of Appeals review after an unagreed examination.

Interest abatement request

Under IRC 6404, interest attributable to unreasonable IRS delay or error may be abated upon written request with supporting facts.

Right to representation notice

The IRS must notify taxpayers of the right to representation and cannot require the taxpayer to accompany an authorized representative absent a summons.

Case note content standard

Each entry records date, time, channel, parties present, and a factual summary. Opinions and characterizations are excluded from case documentation.

Form 2848 versus 8821

Form 2848 authorizes representation before the IRS; Form 8821 authorizes receipt of tax information only, without representation rights.

Section 6103 disclosure limits

Return information may be disclosed only within authorized scope. Unauthorized disclosure can carry civil and criminal penalties.

Fact versus allegation

Case notes must separate taxpayer statements from verified facts. Unverified assertions are recorded as allegations, not as established facts.

Notice content requirements

Correspondence states the taxpayer name, tax period, specific issue, action requested, deadline, and response channel.

Plain language drafting

Short sentences, active voice, and defined technical terms. Notices state the required action and the consequence of inaction.

Case reconstruction standard

A complete history lets another employee reconstruct the case without contacting the taxpayer. Chronology gaps are the most common deficiency.

Secure data transmission

Taxpayer return information must move through encrypted, approved channels. Email outside IRS secure systems is prohibited.

Frivolous return penalty

A $5,000 penalty under IRC 6702 for returns based on positions listed in IRS Notice 2010-33 and later updates.

Civil fraud penalty

75% of the underpayment attributable to fraud under IRC 6663. The IRS bears the burden and must prove fraud clearly and convincingly.

Criminal Investigation referral

Requires a reasonable indication of willfulness, an affirmative act, and a tax loss. Documented on Form 3949-A or the internal channel.

Trust fund recovery penalty

IRC 6672 penalty equal to the unpaid trust fund portion of employment taxes, assessed against each responsible person who willfully failed.

Third-party summons notice

A summons under IRC 7602 may be issued for examination, collection, or investigation. Third-party summonses give the taxpayer 20 days to petition to quash.

Lien versus levy

The federal tax lien arises on assessment and demand. The NFTL provides public notice, and the levy actually seizes property.