What is Covered Under The Taxpayer Bill of Rights?
Taxpayers have dozens and dozens of rights when it comes to their dealings with the IRS. These rights can be found in lots of places, including the Internal Revenue Code, the Internal Revenue Manual, and the IRS Restructuring and Reform Act of 1998. The Taxpayer Bill of Rights condenses all these many privileges into 10 concise statements. No matter their background, anybody can read these and understand their rights.
The 10 rights covered by the Taxpayer Bill of Rights are as follows:
- The right to be informed
- The right to quality service
- The right to pay no more than the correct amount of tax
- The right to challenge the IRS’s position and be heard
- The right to appeal an IRS decision in an independent forum
- The right to finality
- The right to privacy
- The right to confidentiality
- The right to retain representation
- The right to a fair and just tax system
The Taxpayer Bill of Rights – Definitions and Examples
1. The Right to Be Informed
Taxpayers have a right to know what they need to do to comply with tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.
For example, before seizing your state income tax refund, the IRS must send a “notice of intent to levy,” otherwise known as a CP504 notice. These notices will clearly state how much is owed, when the balance must be paid before further action is taken, and what steps can be taken to fix the problem.
2. The Right to Quality Service
Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS; to be spoken to in a way they can easily understand; to receive clear and easy-to-understand communications from the IRS; and to speak to a supervisor about inadequate service.
This right can be seen in the way that the IRS communicates with taxpayers who owe back tax debt. The IRS will typically only contact taxpayers between 8 a.m. and 9 p.m. and will not contact a taxpayer at his or her place of business if the employer forbids this type of communication.
3. The Right to Pay No More than the Correct Amount of Tax
Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.
Say a taxpayer believes that they have overpaid on their taxes. Protected by this right, they can file a refund claim asking for the additional payment amount back.
4. The Right to Challenge the IRS’s Position and Be Heard
Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.
The IRS can — and often does — make mistakes. It does not have dictatorial powers when it comes to the calculation of taxes. If the IRS claims that a taxpayer has made a calculation error on his or her return, that person has a right to challenge the IRS’s claim. The IRS and that taxpayer will both have the opportunity to provide documentation or other evidence to support their conclusion.
5. The Right to Appeal an IRS Decision in an Independent Forum
Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties. Additionally, they have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.
Suppose a taxpayer receives a notice that he or she owes additional tax due to a calculation error on his or her last tax return. In this situation, this taxpayer has the right to have the matter reviewed by an impartial arbiter, such as the U.S. Tax Court.
6. The Right to Finality
Taxpayers 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. Additionally, taxpayers have the right to know when the IRS has finished an audit.
This right manifests in the statute of limitations which applies to collection of back tax debt. This is known as the Collection Statute Expiration Date (CSED), which generally falls 10 years from the assessment date.
7. The Right to Privacy
Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary. The IRS must respect all due process rights, including search and seizure protections, and will provide, where applicable, a collection due process (CDP) hearing.
For example, during an audit procedure, the IRS will avoid inquiries or investigations that have no reasonable basis.
8. The Right to Confidentiality
Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.
For instance, under normal circumstances, the IRS may not reveal a taxpayer’s personal information to a third-party without the express permission of the taxpayer.
9. The Right to Retain Representation
Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. If they cannot afford representation, taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic (LITC).
If a taxpayer has an interview with the IRS, that taxpayer is allowed to obtain a representative to speak on his or her behalf. If they prefer, they may represent themselves instead.
10. The Right to a Fair and Just Tax System
Taxpayers have the right to expect that the tax system will consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers can request assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.
If the IRS intends to levy a taxpayer’s wages, for instance, it cannot seize all of them. A portion will be exempt from levy to allow for payment of basic living expenses.
As you now know, you have a right to representation when dealing with the IRS. If you need assistance dealing with your tax problem, contact Boxelder Consulting for additional information. We can shed more light on your taxpayer rights, or directly assist you with resolving your problem. Call us today at 303-317-6111.