Assessment Statute Expiration Date (ASED).  The date after which the IRS is barred by statute from assessing additional tax liabilities with respect to a particular tax year. Generally, this is three years from the due date of the return or three years from the date of filing whichever is later; however, there are a number of exceptions including fraud (no limit) and substantial omission from gross income (6 years). The ASEDs for Forms 940, 941 and 945 are three years from April 15th of the year following their due date. (more info)

Assignment of Income. A taxpayer’s direction that income earned by him be paid to another person so that it will be considered that other person’s income for federal tax purposes.

At-Risk Rules. Tax rules which generally limit loss deductions to the actual amount the taxpayer is at risk for, including promissory notes on which the taxpayer is personally liable.

Audit Information Management System (AIMS).  A computer system designed to give the IRS's Examination function information about the returns open to Examination and Appeals. IRM § 4.4.32.3 (02-08-99).

Audit Reconsideration.  The process that the IRS uses to reevaluate the results of a prior audit when the taxpayer disagrees with the original determination by providing information that was not previously considered during the previous examination. Or it is the process the IRS uses when the taxpayer contests an ASFR/SFR determination by filing an original delinquent return. IRM § 4.13.1.2 (02-01-2003).

Automated Collection System (ACS).  A centralized, computerized inventory system that maintains certain balance due accounts return delinquency investigations. The ACS generally receives the accounts and investigations after taxpayers have failed to comply with several IRS notices for past due taxes or unfiled returns. Customer Service Representatives (CSRs) assigned to the ACS respond to telephone and correspondence contacts with these taxpayers in an attempt to collect the unpaid taxes and secure the unfiled returns. These ACS contacts occur prior to cases being referred to the IRS's Collection Field Function (CFF), which relies on face-to-face contacts with taxpayers. The ACS and CFF perform many of the same processes, such as analyzing financial statement information, researching assets, entering into installment agreements, making currently not collectible determinations, and taking lien and/or levy enforcement actions.

Automated Substitute for Return Program (ASFR).  The ASFR establishes the tax liability by securing a valid income tax return from the taxpayer or computing tax, penalty and interest based upon Information Reporting Program (IRP). If the ASFR computes the tax, the IRS sends a proposed 30-Day Letter Package and, if no acceptable response, issues a Statutory Notice of Deficiency.

Automated Underreporter Program (AUR).  A procedure whereby the IRS performs a reconciliation between information reported on taxpayers' returns and payer information (e.g., Forms 1099). The product of this procedure is often an IRS Notice CP2000 proposing tax increases.

Avoidance of Tax. Legally structuring tax affairs to reduce tax liability.


B.
Backup Withholding.Income tax that is withheld from investment income. Banks and other financial institutions are required to withhold 31 percent of your investment income if they do not have adequate reporting information for you. The IRS may also require backup withholding if it determines you have underreported your investment income in a prior year.

Badges of Fraud. Facts which suggest but which, standing alone, do not establish the existence of fraud. For example, failure to keep adequate records may be a badge of fraud.

Bag Deposit Method. An indirect method of proof of income used by the IRS when records are suspect or unavailable.

Board of Tax Appeals (BTA). The trial court that considered federal tax matters prior to the establishment of the United States Tax Court.

Business Bad Debt. A debt resulting from the conduct of the taxpayer’s trade or business or a debt that became worthless in connection with the taxpayer’s trade or business.

Business Purpose. A test applied to various transactions to determine whether the transactions qualify as a valid transaction for tax purposes.

C.