L.
Last Known Address. The address that appears on a taxpayer’s most recently filed return, unless the IRS has been otherwise notified of another address.

Lien.  A charge against property, making it security for payment of the tax debt. The IRS accomplishes this by filing a Notice of Federal Tax Lien in the county real and/or personal property records.

Levy.  Seizure of an asset, such as an automobile or bank account. A wage levy is a continuous levy which seizes a substantial portion of each paycheck.


M.
Master File.  Before automated data processing, the IRS maintained all tax accounts on ledger cards. In 1962, this system was replaced with the Master File, which consists of separate computer files for different types of taxpayers, such as individuals, businesses, employee plans and exempt organizations. There are millions of Master File accounts.

Material Participation. A test used to determine whether a taxpayer is involved enough in a business to avoid being subject to the passive-loss rules.

Modified Accelerated Cost Recovery System (MACRS). A method of depreciation that depreciates assets over a longer period than that provided by the Accelerated Cost Recovery System.


N.
Negligence. Lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the given circumstances.

Negligence Penalty. A 20% accuracy-related penalty.

Ninety-Day Letter. A Statutory Notice of Deficiency. The IRS’s institutional position that there is a deficiency in tax. The deficiency will be assessed unless the taxpayer timely files a petition with the U. S. Tax Court.

Non-Master File ("NMF").  Established in 1991, the IRS uses the NMF for accounts that either the master file is not configured to process or that must be processed more quickly than can be done through the master file.

Nonqualified Stock Option ("NSO").  A stock option that does not meet the incentive stock option requirements.

Notice of Deficiency. Also known as a Statutory Notice of Deficiency and as a 90-Day Letter. The IRS’s position as an institution that there is a deficiency in tax due from the taxpayer.

Notice of Levy. A notice that transfers constructive possession of the taxpayer’s property to the Internal Revenue Service.

Notice of Seizure. Notice that the IRS has seized and intends to sell the taxpayer’s property to satisfy delinquent taxes.

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