Get to Know the Taxpayer Bill of Rights – Part 1
Every taxpayer has rights. The Taxpayer Bill of Rights takes these rights from the tax code and groups them into 10 categories. Taxpayers interacting with the IRS should know their rights, which are highlighted in Publication 1, Your Rights as a Taxpayer. You need to know these rights in order to ensure that you aren’t taken advantage of by the IRS. Your tax professional should know them and utilize them whenever necessary.
The Right to Be Informed. The Taxpayer Bill of Rights states that taxpayers have the right to know how to comply with tax laws. They are entitled to clear explanations of the laws and IRS procedures. Taxpayers have the right to know about IRS decisions affecting their accounts with clear explanations of the outcomes.
The IRS shows some evidence of trying to inform the taxpayer of his or her rights. However, they do not do nearly enough. Do not take an IRS agent’s word for it when it comes to laws and procedures. You need to have a clear understanding yourself or a tax professional with knowledge of the tax code and Internal Revenue Manual.
The Right to Quality Service. The Taxpayer Bill of Rights states taxpayers have the right to receive prompt, courteous and professional assistance when dealing with the IRS. They also have the right to speak with a supervisor about inadequate service. Communications from the IRS should be clear and easy to understand.
The Right to Pay No More Than the Correct Amount of Tax. The Taxpayer Bill of Rights states taxpayers must pay only the amount of tax legally due. This includes interest and penalties. The IRS must apply all tax payments properly.
Seems reasonable, right? Does it always work out this way, no. But if you aren’t aware of a problem, you can’t resolve it.
The Right to Challenge the IRS’s Position and Be Heard. The Taxpayer Bill of Rights states Taxpayers have the right to object to formal IRS actions or proposed actions. Taxpayers can expect the IRS to consider timely objections and documentation promptly and fairly. Taxpayers can expect a response when the IRS disagrees with the taxpayer’s position.
You absolutely have the right to challenge the IRS’s position. How and in what manner you do this though is a separate issue. Your tax professional knows the ins and outs of your right to challenge.
The Right to Appeal an IRS Decision in an Independent Forum. The Taxpayer Bill of Rights states taxpayers are entitled to a fair and impartial appeal of most IRS decisions. Taxpayers have the right to receive a written response regarding a decision from the IRS. Taxpayers generally have the right to take their case to court.
Appeals are available to you but you need to know how to utilize them. You’ll find that appeals are a very effective way to deal with the IRS when used properly. FYI: the appeals division is separate from the collections division and generally has more leeway to make decisions outside of strict collections protocol.
The IRS will include The Taxpayer Bill of Rights in Publication 1 when sending a notice on a range of issues, such as an audit or collection matter.
Thanks for reading — and watch for part 2 next week!
Lead Tax Attorney, The W Tax Group