Your Rights as a Taxpayer

Posted By Hollingsworth & Zivitz || 26-Jul-2016

While many people are aware of the Bill of Rights contained in the United States Constitution, very few people are aware that the Internal Revenue Service has adopted its own Bill of Rights for any and all United States taxpayers titled The Taxpayer Bill of Rights. These rights were formulated from pre-existing rights in multiple sections of the federal tax code. In an effort to make these rights better known and easier to find, the IRS grouped these rights into what now constitutes the Taxpayer Bill of Rights. It is important for all taxpayers when engaging with the IRS to remember the rights afforded to them by statute so they can ensure that they are treated properly and fairly. At Hollingsworth & Zivitz, we feel strongly about these rights and believe every client should be informed of their existence and implications under Federal Tax laws.

  1. The Right to Be Informed

Taxpayers have the right to know what they need to do to comply with the 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.

From the offset, the Taxpayer Bill of Rights lays out the most important right available under law to taxpayers: the right to information. Most obviously, this includes the right to access information regarding your return history, as well as forms required for tax compliance. This right, however, extends well beyond that in scope and contains a variety of rights that taxpayers may not know are available to them. For every form issued by the IRS, there are accompanying instructions and publications available at no cost to the taxpayer to provide education on how complete the forms. Furthermore, this right stresses the importance that notice regarding amounts owed, including tax, interest and certain penalties, as well as why you owe them, how to pay them, and even how to challenge them. Finally, the right stresses the IRS’s commitment to non-discrimination whether by race, color, national origin, disability, age, sex, sexual orientation, religion or parental status. To ensure non-discrimination, the IRS provides Spanish copies of all forms and most publications, programs to aid taxpayers with limited English proficiency, and accommodations for taxpayers with disabilities.

  1. 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 easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

Following the right to information is a right that is essential to guaranteeing the aforementioned right: The Right to Quality Service. In assuring compliance with this right, the IRS provides answers to many tax questions on their website, Taxpayers unable to find an answer or needing further information can contact the IRS directly or speak with a supervisor if there is a problem with an IRS employee. Additionally, the IRS guarantees the right to be treated with courtesy in the collection of tax, avoiding tactics that taxpayers may find abrasive and unwelcoming. Such commitments include the avoidance of calling you outside of the hours of 8 a.m. and 9 p.m, as well as engaging in aggressive and threatening phone calls. If you receive or have received such phone calls, it may be a telephone scam. Do not provide information to anyone claiming to be an IRS agent unless you have called the number listed on an IRS notice, or its website. Finally, the IRS will always include information in its notices about the right to Taxpayer Advocate Service assistance, as well as Low Income Taxpayer Clinic assistance.

  1. 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.

This right entitles you, as a taxpayer, to the right to file for a claim of refund if you believe you have overpaid taxes. Additionally, if there is an error on your IRS notice or bill, you have the right to write to the IRS office to have the error corrected. Should you discover an error on a filed return, you are afforded the ability to amend your return to fix the error. If the IRS has assessed after period allowed by law, or in violation of law, or the IRS has caused interest to accrue through unreasonable error or delay, you are entitled to request these errors be remedied. On top of the ability to challenge the IRS directly, the IRS also allows taxpayers to submit offers in compromise which could help you settle with the IRS for substantially less tax than the assessed amount. Finally, if you decide an installment agreement is the best plan for you, the IRS is required to send you statements detailing the beginning year balance, how much you paid during the year and ending year balance.

  1. 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.

Ensuring the right of the taxpayer to not pay more tax than what is owed, comes the right to challenge the IRS’s position. Should the IRS find an error on your return, you will be notified and have 60 days to tell the IRS that you disagree and provide records supporting your position. If the IRS does not agree with you, it will then issue a 90 day letter (Notice of Deficiency) detailing your right to challenge the adjustment in Tax Court. This right to a 90 day letter also carries over to audits. Finally, before collecting a tax debt through levying, the IRS will file a notice of a federal lien and alert you of your right to challenge the lien in the independent Office of Appeals, and further on, the Tax Court.

  1. 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, and 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.

As mentioned in the Right to Challenge the IRS, there is an Office of Appeals, established by the IRS Commissioner, which operates independently from the IRS to review your case. Additionally, there is a United States Tax Court available to taxpayers. This court operates on a rotating schedule, travelling around the states to avoid making the taxpayer suffer additional travel hardship in appealing their case. Finally, there is a right to challenge the IRS in your district’s United States District Court, or the US Court of Federal Claims. However, all of these have different requirements in order to qualify for their review, and you should consult with an attorney or tax professional in deciding which venue is best for you to pursue.

  1. The Right to Finality

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and 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.

Regardless of whether you choose to appeal, amend, or contest any tax related item, a sense of finality should be available on tax issues. Outside of the exception for failing to file a return or fraudulently filing one, the IRS generally has 3 years to assess additional tax for a tax year. After assessment, the IRS has 10 years to collect, unless you enter an installment agreement or there is a court judgment. Any time the period is suspended, the IRS must provide you notice of such a suspension. Additionally, the IRS will provide you with information about any deadlines you are responsible for meeting in any notice they send you.

  1. 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, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

Many people refer to the IRS as the all-seeing eye of the government; however, there are certain areas that the IRS cannot look. When levying wages, the IRS is limited to only the amount of wages which exceed the standard deduction and personal exemption for that taxable year. This amount is pro-rata over your pay periods, ensuring that you will be provided with some form of livable income while you are in collections. Additionally, despite scare tactics in the media, the IRS can only levy your personal residence as an absolute last resort. Furthermore, certain personal items such as schoolbooks, clothing, mail, and defined amounts of furniture and household items are protect from levy. This right also provides protections from intrusive behavior by the IRS. When contesting an issue, the IRS may only require you to submit financial documentation that relates to the matter being contested. Combined, these protections ensure that due process is granted to all taxpayers, as well as protections against unwarranted search and seizures.

  1. 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. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

Not to be confused with the right to privacy which protects you from IRS protrusion, this right protects you from having your personal information and tax situation disclosed to third parties, barring you granting the IRS permission. This applies to individuals, companies, employers, and banks, unless there is reasonable notice of such contact in advance (i.e. Notice the IRS will be contacting your bank or employer to enforce a levy). Any information communicated to such third parties will be limited to only the amount necessary to convey the requirements of the third party to comply with the IRS’ request. Furthermore, the IRS instills privacy protections from federally authorized practitioners from exposing your information. Similar to the attorney-client privilege, federally authorized tax practitioners are bound confidentiality in communication regarding advice on tax matters and proceedings. Additionally, the IRS provides severe fines and penalties for practitioners who knowingly or recklessly disclose your tax information. The IRS Publication Circular 230 provides a more in-depth look at the responsibilities to your privacy of a tax practitioner.

  1. 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. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation

Everyone knows the line from the Miranda Rights regarding your right to the attorney. Similarly, the IRS provides the same right in an expanded role. Due to the nature of the IRS, multiple professions are allowed to serve as your representative before them. These roles are attorney, CPA, or an enrolled agent. Furthermore, any of these may apply to represent you before the Tax Court, assuming they pass the required test provided. Finally, the IRS provides a list of Low Income Tax Clinics should your income fall below a certain level (generally 250% above the poverty line).

  1. The Right to a Fair and Just Tax System

Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive 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.

The IRS generally understands if you are facing a hardship that prohibits you from meeting your tax obligation. On top of entering installment agreements and making offers in compromise, the IRS also offers assistance for those suffering from a significant hardship. Specifically, you may be able to work with the Taxpayer Advocate Service to obtain a Taxpayer Assistance Order which can order the IRS to take certain actions, cease certain actions, or refrain from certain actions which could exasperate your hardship. Additionally, when considering your issue and how much you will be able to pay, the IRS is prohibited from using proscribed lists of national and local guidelines covering the basic costs of living, and must use your actual living expenses should the guidelines result in you not having enough money to pay your basic living expenses. As mentioned earlier, the IRS is also prohibited from levying all of your wages, and must provide you an amount of wages necessary for basic living expenses.

At Hollingsworth & Zivitz, we take your rights as a taxpayer seriously. If you feel that the IRS has violated any of these rights contact our Indianapolis attorneys. We will work with you to ensure that your rights are protected and you can achieve the best possible result for your situation. Call us at 888.211.3888 to connect with our team.

Categories: Tax Law

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