What is reasonable collection potential?

Reasonable collection potential (RCP) is the IRS's estimate of what it could collect from you: the net equity in your assets plus your monthly disposable income multiplied by 12 or 24, depending on the offer type. An offer in compromise generally has to be at least your RCP.

What is the difference between a lien release and a lien withdrawal?

A release ends the lien once the balance is paid, and the public record shows it was released. A withdrawal removes the Notice of Federal Tax Lien as if it had never been filed. You request withdrawal on Form 12277.

What is the difference between a lien and a levy?

A lien is the government's legal claim against your property as security for a tax balance. A levy is the actual seizure of property, such as wages or a bank account, to pay it.

What is the new name for the streamlined installment agreement?

Since July 21, 2026 the IRS calls it the Simple Payment Plan (IRM 5.14.5). It keeps the no-financial-statement approach but drops the old 72-month term: the balance must be paid by the collection statute expiration date.

What does currently not collectible mean?

It means the IRS has temporarily stopped most collection because you can't pay and still meet basic living expenses. The balance remains, penalties and interest keep accruing, and the IRS may review your finances later.

IRS Fresh Start Glossary: Collection Terms Explained

Last reviewed 29 September 2026Reviewed by the tax professionals at Global Gate Tax Relief

Short answer

This glossary defines 60 IRS collection terms you will meet in Fresh Start letters and forms, from CSED and reasonable collection potential to lien withdrawal and the Simple Payment Plan. Each entry is a short plain-English definition linked to its official IRS source and to the hub page that covers it, current as of September 2026.

Key takeaways

Each of the 60 terms has a one- or two-sentence definition, its IRS source and a link to the hub page that covers it.
Several terms changed in 2026: the Simple Payment Plan replaced the streamlined installment agreement, and AEP is replacing First Time Abate.
Lien terms are the most often confused: filing, release, withdrawal, discharge and subordination each mean something different.
Figures in the definitions come from our IRS-checked registry and link to their sources.

How to use this glossary

These 60 terms appear on IRS notices, forms and the pages of this hub. Each definition is written to stand on its own, links to the official IRS source it is based on and, where there is one, to the hub page that explains the topic in full. Dollar amounts, rates and time limits come from our figures registry, checked against IRS.gov, so they update everywhere when the IRS changes them.

Jump to: A to C · D to F · G to L · N to O · P to R · S to U.

New in 2026: the streamlined installment agreement is now the Simple Payment Plan, and First Time Abate is being replaced by the Automatic Exemption from Penalty. Older websites still use the old terms.

Glossary terms A to C

Allowable living expenses: The monthly costs the IRS lets you subtract from income when it works out what you can pay, set mostly by the Collection Financial Standards for food, housing, transportation and health care. IRS: Collection Financial Standards See offer in compromise.
Assessment: The IRS’s formal recording of a tax, penalty or interest on your account. It starts the collection clock, and a lien arises once an assessed amount is billed and not paid. IRS: federal tax lien See the collection statute.
Automatic Exemption from Penalty (AEP): A 2026 IRS program that waives failure-to-file, failure-to-pay and failure-to-deposit penalties automatically for taxpayers who filed and paid on time for the prior three years, starting with tax year 2025 (IRS.gov, 2026) returns; it fully replaces First Time Abate for eligible returns originally due on or after January 1, 2027 (IRS.gov, 2026). IR-2026-83 See the AEP guide.
Collection Due Process (CDP) hearing: An independent Appeals hearing you can request on Form 12153 within 30 days (IRS.gov, 2026) of a final levy notice or a lien filing notice, to propose alternatives such as a payment plan or, in some cases, dispute the amount. IRS Appeals: CDP See how to apply.
Collection Financial Standards: IRS tables of allowable monthly expenses (national standards for food, clothing and out-of-pocket health care; local standards for housing, utilities and transportation) used to measure ability to pay; the current tables took effect June 29, 2026. IRS See Form 433-A.
Collection information statement: The financial statement the IRS uses to judge what you can pay: Form 433-F, 433-A or 433-B for payment plans and CNC status, and the OIC versions of 433-A and 433-B for offers. IRS See Form 433-F.
Collection statute expiration date (CSED): The date the IRS’s legal time to collect a tax ends, generally 10 years (IRS.gov, 2026) after assessment under IRC 6502. Pending payment plan requests, offers, CDP hearings, bankruptcy and long stays abroad pause the clock. IRM 5.1.19 See the 10-year collection statute.
Currently not collectible (CNC): An account status in which the IRS temporarily suspends most collection because paying would leave you unable to meet basic living expenses. The balance is not forgiven, penalties and interest keep accruing, and a lien may be filed. IRS See currently not collectible status.

Glossary terms D to F

Deemed acceptance: The rule that an offer in compromise is automatically accepted if the IRS has not decided it within 2 years (IRS.gov, 2026) of receiving it, not counting any appeal period. IRS See offer in compromise.
Direct debit installment agreement (DDIA): A payment plan paid by automatic monthly withdrawal from your checking account. It has the lowest long-term setup fee ($29 (IRS.gov, 2026) online) and is one condition for asking to have a filed lien withdrawn. IRS: payment plans See IRS payment plans.
Doubt as to collectibility: The most common ground for an offer in compromise: your assets and income are less than the full balance, so the IRS is unlikely to collect it all. IRS Topic 204 See offer in compromise.
Doubt as to liability: An offer ground for a genuine dispute over whether you owe the tax or how much, filed on Form 656-L rather than Form 656. IRS Topic 204
Effective tax administration: An offer ground used when the IRS could collect in full, but doing so would cause economic hardship or be unfair because of exceptional circumstances. IRS Topic 204
Enrolled agent (EA): A tax practitioner licensed by the IRS itself. Enrolled agents, CPAs and attorneys have unlimited rights to represent taxpayers before the IRS, including on collection matters. IRS: preparer credentials See how to verify a representative.
Equitable relief: The broadest form of spousal relief: relief from tax a spouse understated or underpaid on a joint return when it would be unfair to hold you responsible and you don’t qualify for innocent spouse relief or separation of liability. IRS See Fresh Start for married couples.
Equivalent hearing: An Appeals hearing for people who missed the CDP deadline, generally available for up to 1 year (IRS.gov, 2026) after the levy notice; it works like a CDP hearing but without the right to go to Tax Court. IRS Appeals: CDP
Equity in assets (net realizable equity): In an offer, what the IRS counts as available from your property: generally its quick-sale value minus any loans secured by it, calculated as set out in the Form 656-B booklet. Form 656-B See offer in compromise.
Failure-to-deposit penalty: A penalty on employers that don’t deposit employment taxes in full, on time or in the right way. It is one of the three penalties covered by First Time Abate and AEP. IRS: administrative relief See payroll taxes.
Failure-to-file penalty: A penalty of 5% (IRS.gov, 2026) of the unpaid tax for each month or part of a month a return is late, up to 25% (IRS.gov, 2026), with a minimum for returns more than 60 days (IRS.gov, 2026) late. IRS See penalty relief.
Failure-to-pay penalty: A penalty of 0.5% (IRS.gov, 2026) of the unpaid tax a month, up to 25% (IRS.gov, 2026). It drops to 0.25% (IRS.gov, 2026) during an approved payment plan if you filed on time, and rises to 1% (IRS.gov, 2026) after a notice of intent to levy goes unpaid. IRS See penalty relief.
Federal Payment Levy Program (FPLP): An automated levy that takes up to 15% (IRS.gov, 2026) of certain federal payments, including some Social Security benefits, to apply to unpaid taxes. See Fresh Start for seniors and retirees.
Federal tax lien: The government’s legal claim against all your property when you neglect or fail to pay an assessed tax after being billed. It exists whether or not a public notice is filed. IRS See tax lien relief.
First Time Abate (FTA): An administrative waiver of failure-to-file, failure-to-pay and failure-to-deposit penalties for taxpayers who filed the same return type on time for the prior 3 years (IRS.gov, 2026) with no penalties. It is being replaced by AEP. IRS See penalty relief.
Form 12277: The IRS application to withdraw a filed Notice of Federal Tax Lien, used after a qualifying direct debit plan or after the lien is released. Form 12277 (PDF) See our Form 12277 guide.
Fresh Start Initiative: The IRS’s 2011-2012 changes to payment plans, tax liens, offers in compromise and penalty relief, announced in IR-2011-20. It is not a separate program with its own application. IR-2011-20 See the Fresh Start guide.

Glossary terms G to L

Guaranteed installment agreement: A payment plan the IRS must grant under IRC 6159(c) if you owe $10,000 (IRS.gov, July 2026) or less in income tax (not counting penalties and interest), will pay within 3 years (IRS.gov, July 2026) or by the CSED, and had no late filing, late payment or payment plan in the prior 5 (IRS.gov, July 2026) years. IRM 5.14.5 See IRS payment plans.
In-business trust fund express installment agreement: The former name of the plan for operating businesses that owe payroll trust fund taxes. Since July 21, 2026 it is the Simple Payment Plan (Business Trust Fund), for balances of $25,000 (IRS.gov, July 2026) or less. IRM 5.14.5 See payroll taxes.
Innocent spouse relief: Relief from tax on a joint return that was understated because of your spouse’s errors that you didn’t know about, requested on Form 8857. IRS See Fresh Start for married couples.
Installment agreement: The IRS’s formal name for a long-term payment plan: monthly payments on a balance you can’t pay in full within 180 days (IRS.gov, 2026). Penalties and interest continue until the balance is paid. IRS See IRS payment plans.
Interest (underpayment interest): The charge on unpaid tax, set at federal short-term rate plus 3 percentage points (IRS.gov, 2026), reset quarterly and compounded daily; 7% (IRS.gov, Jul-Dec 2026) for the quarter beginning October 1, 2026 (IR-2026-98 (IRS.gov, Q4 2026)). The IRS cannot waive it for hardship. IRS: quarterly rates See key figures.
Levy: The legal seizure of property to pay a tax, such as wages, bank accounts or federal payments. A lien secures the government’s claim; a levy actually takes the property. IRS See IRS bank levy help.
Lien discharge: Removal of the federal tax lien from one specific property, for example so it can be sold, while the lien stays on everything else. IRS See tax lien relief.
Lien release: The end of the lien once the balance is paid, or no longer collectible. The IRS releases a lien within 30 days after you pay in full. IRS See tax lien relief.
Lien subordination: An IRS agreement that lets another creditor move ahead of the federal tax lien, often to allow a refinance. It does not remove the lien. IRS See tax lien relief.
Lien withdrawal: Removal of the public Notice of Federal Tax Lien as if it had never been filed, requested on Form 12277. After a direct debit plan it generally requires a balance of $25,000 (IRS.gov, 2026) or less, full payment within 60 months (IRS.gov, 2026) or by the CSED, and 3 (IRS.gov, 2026) consecutive payments; after a release it requires 3 years (IRS.gov, 2026) of compliance. IRS See tax lien relief.
Low Income Taxpayer Clinic (LITC): An independent clinic, partly funded by IRS grants, that represents eligible low-income taxpayers in disputes with the IRS for free or a small fee. IRS
Low-income certification: The Form 656 section that waives the offer application fee and the initial payment for individuals whose household income is at or below 250% (IRS.gov, 2026) of the federal poverty guidelines ($39,900 (IRS.gov, April 2026) for a household of one in the 48 contiguous states). Form 656-B See Form 656.
Lump-sum cash offer: An offer paid in 5 months (IRS.gov, April 2026) or fewer payments after acceptance. You send 20% (IRS.gov, April 2026) of the offer with the application, and the IRS counts 12 (IRS.gov, April 2026) months of future income in its minimum. Form 656-B See offer in compromise.

Glossary terms N to O

Non-streamlined installment agreement: An informal name for a long-term payment plan that does not qualify as a Simple Payment Plan, usually because the balance is above the limit. The IRS generally asks for a collection information statement before approving one. IRS See IRS payment plans.
Notice of Federal Tax Lien (NFTL): The public document the IRS files to alert creditors to its lien. The IRS generally files one when the unpaid balance reaches $10,000 (IRS.gov, July 2024 (IRM effective date)), but that is a guideline, not a floor. IRM 5.12.2 See tax lien relief.
Notice of intent to levy: The IRS warning that it may seize property. The final notice (such as LT11 or Letter 1058) starts the 30 days window to request a CDP hearing; CP504 is an earlier intent-to-levy notice. IRS Appeals: CDP See CP504 explained.
Offer in compromise (OIC): An agreement that settles a tax balance for less than the full amount, generally accepted only when the offer is the most the IRS can expect to collect in a reasonable time. The application fee is $205 (IRS.gov, 2026). IRS See offer in compromise.
Online Payment Agreement (OPA): The IRS’s online application for payment plans. Individuals who owe $50,000 (IRS.gov, 2026) or less for a long-term plan, or less than $100,000 (IRS.gov, 2026) for a short-term plan, get an immediate answer; businesses apply by phone. IRS See how to apply.

Glossary terms P to R

Partial payment installment agreement (PPIA): A payment plan whose payments will not pay the full balance before the CSED. It requires a financial statement, and the IRS reviews your finances about every two years. IRM 5.14.2 See partial payment plans.
Passport certification: The IRS can certify to the State Department taxpayers with “seriously delinquent tax debt” above $66,000 (IRS.gov, 2026) for 2026, which can lead to denial or revocation of a passport. Balances being paid on time under an approved installment agreement, covered by an accepted offer or in hardship CNC status are excluded. IRS See key figures.
Periodic payment offer: An offer paid in monthly installments over 6 to 24 months (IRS.gov, April 2026). Payments must continue while the IRS evaluates the offer, and the minimum counts 24 (IRS.gov, April 2026) months of future income. Form 656-B See offer in compromise.
Power of attorney (Form 2848): The form that authorizes an attorney, CPA or enrolled agent to represent you before the IRS and see your records. Form 2848 (PDF) See Form 2848.
Offer in Compromise Pre-Qualifier: A free IRS online tool that checks whether you are eligible for an offer and estimates a starting offer amount before you pay the application fee. IRS See our offer estimator.
Reasonable cause: Grounds for penalty relief when circumstances beyond your control, such as a disaster, serious illness or inability to get records, stopped you from filing or paying on time. Lack of funds alone generally does not qualify. IRS See penalty relief.
Reasonable collection potential (RCP): The IRS’s estimate of what it could collect from you: net equity in assets plus future disposable income for 12 or 24 months, depending on the offer type. It is the benchmark for an offer. Form 656-B See the offer estimator.
Revenue officer: An IRS collection employee who handles larger or complex cases in person. Visits usually follow a letter, and you can verify an officer’s identity before sharing information. IRS: how to know it’s the IRS

Glossary terms S to U

Separation of liability relief: Spousal relief that splits an understatement on a joint return so you pay only your share, available if you are divorced, separated or no longer living with your spouse. IRS See Fresh Start for married couples.
Short-term payment plan: A plan to pay in full within 180 days, with a $0 (IRS.gov, 2026) setup fee. Penalties and interest continue until the balance is paid. IRS See IRS payment plans.
Simple Payment Plan: The long-term payment plan that needs no financial statement: $50,000 (IRS.gov, July 2026) or less for individuals, $50,000 (IRS.gov, July 2026) for businesses without trust fund taxes, paid by the CSED (IRS.gov, July 2026). It replaced the streamlined installment agreement on July 21, 2026. IRS See the Simple Payment Plan.
Streamlined installment agreement: The former name of the Simple Payment Plan. Its 2012 rules (a 72-month term and direct debit for larger balances) no longer apply. IRM 5.14.5 See 2011-2012 vs 2026 rules.
Taxpayer Advocate Service (TAS): An independent office within the IRS that helps, for free, when an IRS problem is causing financial hardship or isn’t being resolved through normal channels. Call 877-777-4778 (IRS.gov, 2026) or file Form 911. IRS
Transcript (account transcript): An IRS record of your account for one tax year, showing assessments, penalties, interest and payments with dates. It is the starting point for checking what you owe and your CSED. IRS: get transcript See how to apply.
Trust fund recovery penalty (TFRP): A personal penalty, equal to the unpaid trust fund taxes, on anyone responsible for collecting or paying them who willfully failed to do so, such as an owner, officer or bookkeeper. IRS See payroll taxes.
Trust fund taxes: Income tax and the employee share of Social Security and Medicare that an employer withholds from pay and holds in trust until it deposits them with the IRS. IRS See payroll tax problems.
User fee: The IRS charge to set up or change a payment plan: from $29 for direct debit online to $178 (IRS.gov, 2026) for a non-direct-debit plan set up by phone, mail or in person, with reductions for low-income taxpayers. IRS See costs and fees.

Commonly confused terms

Pair	The difference
Lien vs levy	A lien is a claim on your property; a levy takes it.
Lien release vs lien withdrawal	Release ends the lien after payment; withdrawal removes the public notice as if it had never been filed.
Lien filing guideline vs withdrawal limit	The IRS generally files a notice at $10,000; withdrawal after a direct debit plan requires owing $25,000 or less.
Penalty relief vs offer in compromise	Penalty relief removes penalties only; an offer can settle tax, penalties and interest for less.
CNC vs partial payment plan	CNC pauses payments entirely; a PPIA takes monthly payments that won’t cover the full balance.
First Time Abate vs AEP	FTA must be requested; AEP is applied automatically, and replaces FTA for returns due from January 1, 2027.

Frequently asked questions

It is the date the IRS’s time to collect a tax runs out, generally 10 years after the tax was assessed (IRC 6502). Each assessment has its own CSED, and the clock pauses during events such as a pending offer, a pending payment plan request, a CDP hearing or bankruptcy.

Sources

We check every figure against IRS.gov and log changes on the key figures page.

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This page is general information about IRS rules, not tax or legal advice for your situation. IRS figures change; each one links to its official source and the date we last checked it.

IRS Fresh Start Glossary