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Know Your Taxpayer Rights

Best PersonalTaxPrep.com tax tip this year: Know your rights.

Fifteen years ago, the IRS has created the Taxpayer Bill of Rights (TBOR).  Since then, congress codified it as part of the tax code.  That means the Taxpayer Bill of Rights is law and it applies to all U.S. taxpayers anytime they must deal with the IRS.

The bill of rights includes:

Image by Peggy und Marco Lachmann-Anke from Pixabay
  1. The right to be informed. As a taxpayer, you have the right to know what you need to do in order to comply with the tax laws.  This means you have a right to clear explanation of the laws and of the IRS procedures.  Taxpayers have the right to be informed of IRS decisions about their tax accounts.  Follow the informed link to find out specific information and notices you can expect, and a list of the languages in which you may access that information.
  2. The right to quality service. When you interact with an IRS spokesperson, you have the right to prompt, courteous and professional assistance, in a way easily understood.  The IRS is making an effort to make information available on it’s IRS.gov site, on social media such as Facebook and Twitter and by calling the phone number in the top right corner of any IRS notice or letter.  The IRS will not attempt to text you nor threaten you arrest via phone or text.  If that happens, hang up and call the IRS directly to find out whether it was a scam call.
  3. The right to pay no more than the correct amount of taxThe IRS can collect only the amount of tax, interest and penalties that is legally due, and you have the right to have the IRS apply all tax payments properly.  If you think you overpaid your taxes, you can file for a refund, as long as it is within the specific time frame, as per publication 556.  If you realize you made an error on your return, you may need to file an amended return if the error affects the amount due.  You can submit an offer in compromise, asking the IRS to accept less than the full amount of your tax debt if you feel you owe a different amount.  If you enter into a payment plan, the IRS must send you an annual statement with balances and a record of payments you have made.
  4. The right to challenge the IRS’s position and be heard.  The IRS may be wrong.  As a US Taxpayer, you have the right to object to an IRS opinion of what you owe, though you need to provide additional documentation in response to formal IRS actions or to proposed actions.  The IRS must, in turn consider your timely objections and documentation promptly and fairly.  The IRS will also deliver their response regarding that consideration, to the taxpayer. 
  5. The right to appeal an IRS decision in an independent forum.  The IRS commissioner must furnish an IRS Office of Appeals, separate from the IRS office that initially reviews the taxpayer’s case, who will consider any appeal filed by a taxpayer.  This can be over an IRS notice of deficiency that you do not feel you owe, or a tax refund that is not acted on within six months, or another IRS decision you feel is in error.  You generally have two years to file a refund suit.
  6. The right to finality.  Wondering how long to keep those documents?  According to TBOR, there are different, but concrete times allotted for the IRS to reassess taxes owed for any return.  The IRS has 3 years from the date of tax filing to assess additional tax for that tax year .  There is an exception to the 3 year rule: If you fail to file a return, or you file a false/ fraudulent return, the IRS has unlimited period of time to assess tax for that tax year.  If the IRS has assessed unpaid taxes from you, they have 10 years to collect those taxes. This period can only be extended if you agree to an installment that is longer than the 10 years.   The finality extends to you as well.  If you feel you overpaid your taxes, you must file your refund claim within 3 years.  IF the IRS sends you a notice of additional taxes owed, that notice must include the deadline for you to file a petition with the Tax Court to challenge the proposed amount of additional taxes owed.  For more on this click the link above.
  7. The right to privacyBy right, any IRS inquiry, examination or enforcement action will be no more intrusive than needed.  It will comply with all due process rights, including search and seizure protections.  Taxpayer right to privacy may include a collection hearing, where applicable.  While the IRS may garnish your wages when attempting to collect past due taxes, there is a portion of your income protected from garnishment.
  8. The right to confidentiality.  Any information provided 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 misuse or disclose taxpayer return information.  Note: when you sign a 4506T for a mortgage or student loan application, you are authorizing the release of your tax information.  So be aware of documents you sign and to whom you are releasing your tax records.
  9. The right to retain representation.  Taxpayers have the right to retain an authorized representative, such as an attorney, certified public accountant or enrolled agent to represent you in IRS interviews.  There are exceptions, but in most situations, the IRS must suspend an interview if you wish to consult with an authorized representative who is not disbarred or suspended from practice with the IRS.  If your income is below the limits set, you may as a low income taxpayer clinic (LITC) to represent you in your tax dispute.  If language is a barrier, the good news is that many LITCs offer services in multiple languages.  IRS funds help support this organization, but LITCs are independent of the IRS.
  10. The right to a fair and just tax system.  This is a little vague, but it means the IRS must consider facts and circumstances that could affect ability to provide documentation timely, ability to repay, and even the liability itself. If taxpayers are experiencing financial difficulty or if the IRS is not resolving the tax issues reasonably, the taxpayer has the right to assistance from the taxpayer advocate service.

All of the details to the TBOR are available on the IRS.gov website.  The decision to print each of them here with a link to learn more about each, was made based on a discussion with a retired taxpayer advocate.  I asked her since these rights were 15 years old, were they relevant today?  She answered: absolutely.  People don’t know about these rights, and you need to tell them.  I asked what one thing is most important about the taxpayer bill of rights?  Her response:  “The Taxpayer Bill of Rights was codified by congress.  That means they are law.”

If you need to find an authorized tax representative, visit www.personaltaxprep.com to be connected to an authorized professional in good standing with the IRS.