All taxpayers have the legal right to privacy. The right to privacy is one of ten rights the Taxpayer Bill of Rights gives all taxpayers. If you want to see a copy of your rights as a taxpayer, go here.
You have the right to expect that any IRS investigation, audit or enforcement action like wage levy or bank garnishment is legal and is no more intrusive than necessary.
What does that mean, exactly? It’s hard to say. There’s caselaw which tells us when the IRS goes above and beyond what they are allowed to do. But if you feel that the IRS has done something inappropriately intrusive, you have the right to request an appeal. And you should.
The IRS must also respect all due process rights. Due process rights basically means you have the right to the fair application of law before your property is taken. There are limitations on the IRS’s ability to search and seize personal and real assets including vehicles and homes. You always have the right to request and have a collection due process hearing where an independent appeals officer will review what the IRS has done and determining whether it was appropriate.
The right to privacy extends further –
The IRS cannot seize certain personal items, such as schoolbooks, clothing and undelivered mail.
The IRS cannot seize a personal residence without first getting court approval, and the agency must show there is no reasonable alternative for collecting the tax liability.
This is a long and very involved process. It doesn’t just happen one day. I have many clients come to me worried that the IRS is going to take their house. They might receive a certified letter and assume that it is the IRS letting them know they are taking their house. It never is. It doesn’t just happen one day. It takes a long, long time. It takes court orders. There are many steps that need to be taken before a home can be taken.
During an audit, if the IRS cannot find any real indication that a taxpayer has unreported income, the IRS cannot not seek intrusive and unrelated information about the taxpayer’s lifestyle. This is a “you know it when you see it” type of action by the IRS. At some point they have to stop. And if they don’t an appeal should be filed.
Bottom line: As a taxpayer, you can expect that the IRS’s collection actions will not be more intrusive than necessary. If an appeals hearing is necessary, the Office of Appeals must balance the expectation that the IRS’s actions will not be overly intrusive with the IRS’s collection action while also taking into account the governments need for efficient tax collection.
Don’t let the IRS run over you. They have a lot of power. More than any of “collection agency” you have ever dealt with. But there are limits to their power and you must take advantage of your rights. An experienced tax professional can advocate for you. Don’t go at it alone. Find someone you trust.
