As a taxpayer you need to know that you have rights; rights existing in Taxpayer Your Bill of Rights, designed to help you when having to deal with the IRS.
You have the right to know what you need to do in order to comply with tax laws.
This means you’re entitled to clear outlines, explanations of the tax laws and procedures the IRS uses in all forms, instructions, publications and notices.
Turn back the clock to the 1980’s.
For instance, you turn in your taxes, expecting a refund; but instead you are told you owe money to the IRS.
Similarly, this goes on to happen to other taxpayers!
The U.S. Government becomes aware of these abuses taking place at the IRS; so, taxpayer rights move to the forefront in Washington and as a result; the Omnibus Taxpayer Bill of Rights Act is established in 1988.
However, more needed to be done, so, the Office of the Taxpayer Advocate was born, better known as the TPA or Taxpayer Advocate Service.
The TPA is a great thing for you and me; because it’s an office independent of the IRS!
Taxpayer Bill Of Rights
Right #1: To Be Informed
Whether it be an amount of tax owed, any interest or penalties; YOU have a right to be informed!
- IRS must explain why you owe amounts they are seeking
- If your Claim for refund is partially or fully rejected, the IRS must explain why
- They must inform you of the Tax Assessment Process from Audit through Collection
- And tell you exactly how the (TPA) Tax Advocate Service can assist you
- Should you be on a payment plan; you must be sent payment installment statements
Right #2: Quality Of Service
As a Taxpayer, you have a right to prompt, courteous, professional, quality service in your interactions with the IRS.
If ever a time comes when the opposite happens, it is your right to speak to an IRS supervisor regarding the inadequate and poor service you’ve received.
Your Taxpayer Bill of Rights Include:
- IRS.gov having answers to most frequently asked questions
- You being able to contact the IRS for help anytime
- Them letting you know if you’re eligible for Low Income Taxpayer Assistance
- Seeing a contact phone number on any notice you receive
- Only being contacted between 8am and 9pm
- And not being contacted at your place of employment
Right #3: Pay No More Than Amount Legally Due
Straight from our friends at the Taxpayer Advocate Service:
“Taxpayers have the right to pay only the amount of tax legally due and to have the IRS apply all tax payments properly.”
What this means to you is:
- If the IRS is proposing to adjust the amount of tax you owe, you will be sent a statutory notice of deficiency which informs you of the proposed change
- This notice provides you with a right to challenge the proposed adjustment in Tax Court without first paying the proposed adjustment (more on that below in Right #4)
- So, to exercise this right, you must file a petition with the Tax Court within 90 days of the date of the notice being sent
- If you believe you have overpaid your taxes, you can file for a refund; however, there are specific time frames in which you must file your claim
- Should you have a legitimate doubt about part or all of the tax debt, you can submit a settlement offer, called an Offer in Compromise
Right #4: Your Right To Challenge And Be Heard!
Okay, maybe not that loud.
Seriously, as a Taxpayer, you have the right to raise objections and provide additional documentation in response to any formal IRS actions or proposed actions.
It is your right to expect that the IRS will consider their timely objections and documentation promptly and fairly, and that you receive a response if the IRS does not agree with your position.
In Your Taxpayer Bill of Rights:
- If the IRS notifies you that your tax return has a math or clerical error, you have 60 days to tell the IRS that you disagree
- Provide photocopies of any records that may help correct the error
- In addition, you may call the number listed on your notice or bill for help
- If the IRS agrees with your position, they will make the necessary adjustment to your account and send you a corrected notice.
- Should the IRS not adopt your position, they will send you a notice proposing a tax adjustment; otherwise known as a statutory notice of deficiency
- The statutory notice of deficiency gives you the right to challenge the proposed adjustment in the United States Tax Court before paying it
- To do this, you need to file a petition within 90 days of the date of the notice
Should the IRS ever notify you of plans to levy your bank account or other property, you will have an opportunity to request a hearing before the Office of Appeals; which brings us to Right Number 5.
Right #5: Appeal IRS Decision In An Independent Forum
A comforting fact for all taxpayers is knowing you have the right to seek help from an Independent office, the IRS Office of Appeals.
You’re entitled to a fair and impartial administrative appeal of Most IRS decisions and in addition, you have the right to receive a written response regarding any decision by the Office of Appeals.
What to Know:
- Office of Appeals will not discuss a case with the IRS so, as not to compromise their Independence from the IRS
- Publication 5 tells you how to go about appealing if you disagree with the IRS’s Decision
- If the IRS proposes additional tax and you respond in a timely manner; you may dispute their proposed adjustment in tax court BEFORE you are required to pay the tax
- Should the IRS Deny your Tax Refund Claim or if they fail to take action within 6 months’ time; it’s your right to file a refund suit in the United States District Court or the United States Court of Federal Claims
Right #6: Finality
You have the right to
know the maximum amount of time they have to challenge the IRS’s position as
well as the maximum amount of time the IRS has to audit a particular tax year
or collect a tax debt.
In other words; you have the right to know when the IRS has finished your audit!
Important Facts to Know:
- The IRS has three years from the date you file your return to assess any additional tax for that tax year.
- Unless; you file a late tax return.
- In that case, the amount of time the IRS has is Unlimited!
- Regarding collecting unpaid taxes from you; the IRS has 10 years’ time from the assessment date to collect unless
- You agree to extend the period as part of an installment plan to pay down the debt
It’s important that you come to know all you can and because of this, we invite you to schedule a Free Consultation, so that we can put your mind at ease by answering any questions you may have.
Right #7: Privacy
Just like you, the IRS is required to follow the law!
So, any inquiry, examination or action must comply with the law and respect all your due process rights.
What You Need to Know:
- The IRS states that any personal information you provide the IRS is Voluntary
- Meaning, they cannot seek intrusive information about your lifestyle unless there is evidence or a strong sign that you may have unreported income
- Necessary personal items like clothing, books, furniture, household items, and undelivered mail cannot be seized by the IRS
- Your home cannot be seized by the IRS without a court approval
- Limits exist on the amount of wages that the IRS can seize in order to collect taxes you owe
Bill of Rights – Right #8: Confidentiality
As a Taxpayer, you have the right to expect that any information you provide to the IRS, will not be disclosed unless authorized by you, the taxpayer, or by law.
In addition, it is your right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return
What Can’t Happen:
- The IRS may not disclose your tax information to any third parties unless you give them permission to do so
- In general, the IRS can’t contact third parties such as your employer, neighbors or bank, to get information to adjust or collect the tax you owe unless they give you reasonable notice in advance.
Basically, you have the right to expect the same protection and confidentiality that would exist between you and your attorney.
The big takeaway for you here is that if anyone preparing your taxes knowingly or recklessly disclose or use your tax information, for any reason other than for tax return preparation; they may face criminal fines and prison.
Right #9: The Right To Retain Representation
You have the right to retain an authorized representative of
their choice to represent you in any dealings or interactions with the IRS.
It is also in your rights to seek help from a Low-Income Taxpayer Clinic should you not be able to afford representation.
You have options such as selecting an attorney, a certified public accountant or an enrolled agent to represent you in an interview with the IRS.
Bill Of Rights – Right #10: A Fair And Just Tax System
You have the right to expect the tax system to consider any facts
and circumstances that might have or could affect underlying liabilities including:
- Your ability to pay
- Ability to provide timely information
- In that case, you have the right to receive assistance from the TPA
What You Need to Know:
- Regarding your tax debt, you can arrange a payment plan with the IRS
- You can submit an Offer In Compromise to settle for less than the full amount
- Check the IRS’s National and Local Guidelines regarding cost of living in an effort to reduce your tax debt.