FAQ: Tax Law

What Rights do Taxpayers Have When Dealing with the IRS?

Congress has taken a few steps to ensure that taxpayers are protected when dealing with the Internal Revenue Service (IRS). Congress passed a Taxpayer Bill of Rights in 1988 and again in 1996. The provisions of the 1996 legislation include:

  • Taxpayer assistance orders, providing relief for taxpayers who might suffer hardship due to an enforcement action
  • Increased right to appeal liens or seizures, either before or after a collection action
  • Greater notice prior to making a levy and issuing summons to a third party
  • Administrative appeal of liens
  • Awards for reasonable costs (administrative and litigation) when the IRS takes unreasonable positions
  • Damages for disclosure of return, failure to properly release lien and unauthorized enforcement actions

The 1996 Taxpayer Bill of Rights also created the Taxpayer Advocate Service, an independent organization within the IRS. The Taxpayer Advocate Service works with individuals whose tax problems are not resolved through the normal procedures to ensure that the issues are handled promptly and fairly.

In 1998, Congress passed the IRS Restructuring and Reform Act which included the following provisions:

  • Burden of proof in civil cases involving tax disputes shifted from taxpayer to the IRS
  • Suspension of penalties and interest if the IRS waits more than 18 months to inform someone that additional taxes are owed
  • Protection from collection actions in certain cases for people whose tax problems were caused without their knowledge by their spouse
  • Expanded powers for the Taxpayer Advocate Service to grant taxpayer assistance orders, halting tax collections in cases of potential hardship
  • Tax relief such as reduction of the long term capital gains holding period; education incentives; principal residence gain exclusions; EIC expansion; new IRAs; and estate and gift provisions
  • Expansion of rights or privileges in the areas of interest calculations for taxes and refunds; liens, levies and seizures; audit criteria; tip reporting; offers in compromise and installment agreements; new "due process" requirements; more inclusive innocent spouse provisions; and third party summonses

In dealing with the IRS, a taxpayer also has the following rights:

  • The IRS will not disclose information about you to anyone, unless the law authorizes disclosure
  • If the IRS asks for information, a taxpayer has the right to know why, how it will be used and the consequences of nondisclosure
  • If an error or delay of an IRS employee results in a taxpayer being charged interest, the IRS will waive that interest
  • If a taxpayer is entitled to a refund and the IRS takes longer than 45 days from the date the refund claim or return is filed to send you a check, the IRS will generally owe the taxpayer interest
  • If a taxpayer can show that he or she acted reasonably and in good faith or relied on the incorrect advice of the IRS, the IRS will waive penalties when allowed by law
  • A taxpayer is only obligated to pay the correct amount of tax due under the law and no more or no less

There are certain rights that taxpayers have with respect to audits as well. Taxpayers have the right to represent themselves at the examination or they can have an attorney, certified public accountant, an agent enrolled to practice before the IRS or the person who prepared their return represent them. A taxpayer is also permitted to make sound recordings of any meetings with the IRS's examination, appeals or collection personnel if he or she notifies the IRS ten days before the meeting. If a taxpayer disagrees with the IRS about his or her tax liability, the taxpayer has a right to ask the Appeals Office to review the case.

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