Your Rights as a TaxPayer

“A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned — this is the sum of good government.”

Thomas Jefferson, First Inaugural Address, 1801

There is a tad bit more government in our lives than in the days of Thomas Jefferson in 1800.   A lot has changed and we have benefited from the freedoms this government protects.   Nevertheless, we still don’t like to pay taxes.   Our laws say that the payment of tax is voluntary.  That is, until we don’t pay.  Then the government steps in to do a little coaxing.

Persuasion can turn into a forceful taking if you ignore the IRS.  If you are in the process of being persuaded to pay your taxes, you should remember that you still have rights.  Exercising your rights will make a tough situation bearable and, in some cases, can be the key to averting disaster.   Not knowing or exercising your rights can make your situation downright unbearable and the government becomes an oppressive gorilla on your back.

The Internal Revenue Service issued its Bill of Rights in Publication 1 “Your Rights as a Taxpayer.”  I have outlined them directly from the IRS.gov website.   For the most part, the IRS does a pretty good job of not actively violating taxpayer’s rights.  However, there are times when IRS tax collectors get overzealous and cross the line.  Whether you are dealing with a tax collector who respects your rights or not, it pays to know your rights and how to go about asserting them.   

  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.

  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.

  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.

  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.

  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.

  1. 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. Taxpayers have the right to know when the IRS has finished an audit.

  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.

  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.

  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.

  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 above seeks to protect your rights that are guaranteed in the US Constitution.  But the power of collections is held first by people that may or may not have your interest at heart.  They don’t have to explain these rights except by providing a few publications and explanations in their collection notices. 

Some of the above rights sound like platitudes.  For example, those of you who have experienced hold times in excess of one hour when calling the IRS Collections 800 number probably, and rightly, think that the “Right to Quality Service” has got to be a joke.  However, other rights are, in fact, extremely important.  Two that come to mind are the right to appeal and the right to representation.

There have been countless times in my career representing taxpayers in collections when exercising my clients’ right to appeal has resulted in dramatically better results than the IRS was initially willing to approve.  I’m not exaggerating when I say that there have been dozens of businesses that I’ve represented that are still in business today that would not be if it wasn’t for an appeal I filed and successfully argued.  With regard to individuals, there have been plenty who would have lost their homes had I not successfully appealed.

This brings me to what just may be the most important taxpayer right of all:  the right to representation.  Exercising this right will allow a taxpayer to more fully enjoy the other rights afforded and it makes the whole process of resolving your tax liability a lot easier.   Competent representation allows you to get on with pursuing your work and other activities. 

Whereas IRS Collection Officers understand complex collection procedures and have the power to wreak havoc on the lives of taxpayers in collections, taxpayers who represent themselves are at a distinct disadvantage.  Having a knowledgeable and effective tax resolution professional helps to level the playing field.  Moreover, a skilled tax resolution professional can minimize the chances of enforced collections, help identify the best way of resolving a tax debt given the circumstances, and maximize the chances of a successful resolution. 

There is a reason why taxpayers have rights. Rather than “flying blind” against an opponent who knows the game and carries a big stick, consider exercising your right to representation—especially if you have a large tax liability.