- An IRS 90-Day Letter notifies an individual that their taxes were audited and a discrepancy was found, requiring payment unless petitioned within 90 days. - An abusive tax shelter is an investment scheme that claims to reduce taxes without changing income/assets and serves no economic purpose other than lowering taxes owed. People who use abusive tax shelters can face penalties from the IRS including back taxes and interest. - A tax shelter is a legal way to minimize taxable income and tax liability, such as 401(k) plans or investments providing favorable tax treatment.

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What Does 90-Day Letter Mean?
An IRS notice sent after an audit stating that there was a discrepancy or error within an individuals taxes
and they will be assessed unless petitioned.
Investopedia explains 90-Day Letter
You have 90 days to respond, otherwise the audit deficiencies will result in reassessment.
What Does Abusive Tax Shelter Mean?
An investment scheme that claims to reduce income tax without changing the value of the user's income
or assets. Abusive tax shelters serve no economic purpose other than lowering the federal or state tax
owed when filing. Often, these schemes channel funds through trusts or partnerships to avoid taxation.
Investopedia explains Abusive Tax Shelter
People who invest in abusive tax shelters can be penalized by the Internal Revenue Service (IRS).
Typically, when the IRS determines someone has used such a scheme, the person will owe back taxes
with accrued interest.
To help taxpayers recognize potential schemes, the IRS has compiled a list of transactions that
are abusive tax shelters. If a tax shelter resembles a listed transaction, it is considered abusive and the
users may face penalties
What Does Tax Shelter Mean?
A legal method of minimizing or decreasing an investor's taxable income and, therefore, his or her tax
liability. Tax shelters can range from investments or investment accounts that provide favorable tax
treatment, to activities or transactions that lower taxable income. The most common type of tax shelter
is an employer-sponsored 401(k) plan.
What Does Internal Revenue Service - IRS Mean?
A United States government agency that is responsible for the collection and enforcement of taxes. The
IRS was established in 1862 by President Lincoln and operates under the authority of the United States
Department of the Treasury. It is primarily engaged in the collection of individual income taxes and
employment taxes, but also handles corporate, gift, excise and estate taxes.
The IRS is sometimes referred to as the "tax man".
What Does Corporate Tax Mean?
A levy placed on the profit of a firm; different rates are used for different levels of profits.
What Does Audit Mean?
1. An unbiased examination and evaluation of the financial statements of an organization. It can be done
internally (by employees of the organization) or externally (by an outside firm).

2. 2. An IRS examination of a taxpayer's return or other transactions. The IRS performs this examination to
verify the accuracy of these filings.
What Does Excise Tax Mean?
1. An indirect tax charged on the sale of a particular good.
2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and
paid to the Internal Revenue Service (IRS).
What Does Federal Tax Brackets Mean?
Income tax groupings specified by the Internal Revenue Service (IRS) that determine at what rate an
individual, trust, or corporation's annual income will be subject to federal income tax. Federal tax brackets
are adjusted periodically to account for the effects of inflation over time.
What Does Income Tax Mean?
A tax that governments impose on financial income generated by all entities within their jurisdiction. By
law, businesses and individuals must file an income tax return every year to determine whether they owe
any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to
fund its activities and serve the public.
What Does Revenue Act Of 1862 Mean?
This act increased taxes and implemented the first federal income tax in the United States. The Revenue
Act of 1862 was passed by Congress in order to fund the American Civil War, and in the process also
created the Bureau of Internal Revenue that managed tax collection duties. The income tax was the best
source of income during that period, increasing government coffers by an estimated $340 million during
the 10 year period it existed.
What Does Tax Liability Mean?
The total amount of tax that an entity is legally obligated to pay to an authority as the result of the
occurrence of a taxable event. Tax liability can be calculated by applying the appropriate tax rate to the
taxable event's tax base. Taxable events include, but are not limited to, annual income, the sale of an
asset, a fiscal year-end or an inheritance.
What Does Throwback Rule Mean?
A measure states can adopt to ensure corporations pay state taxes on 100% of their profits. Traditional
state apportionment formulas base state corporate taxes on a formula that considers where a
corporation's property, payroll and sales are located. These formulas result in "nowhere income," or
income on which a corporation does not pay tax in any state. The throwback rule is meant to eliminate
this tax loophole.