What is the Taxpayer Bill of Rights?

 

  • No longer does the IRS have all the advantages in dealing with taxpayers. Your rights as a taxpayer have been dramatically increased with the passing of the Taxpayer Bill of Rights. Instituted in 1989, the Taxpayer Bill of Rights specifies your rights in dealing with the IRS. The Taxpayer Bill of Rights II, enacted in 1996, and the Taxpayer Bill of Rights III, enacted in 1998, further expanded those taxpayer rights. One aim of the Taxpayer Bill of Rights is to have the IRS inform you of the effect of the tax action the IRS is taking and how you can proceed and protect your rights.

 

  • IRS personnel must deal with you in a professional manner and must:
  • Provide the tax information and tax help that you need to comply with the tax laws;
  • Ensure personal and financial confidentiality;
  • Provide clear explanations in any IRS tax notice or mail inquiries, and provide additional information if requested. If the IRS sends you a tax notice of a tax deficiency or tax collection action, the IRS must include a non-technical statement of your taxpayer rights during an IRS tax audit and an explanation of IRS collection and tax appeals procedures within the IRS and the courts;
  • Collect tax fairly (e. g., the IRS generally can't sell your home to collect tax). If the IRS threatens to seize your property or take some other tax collection measure that could cause you significant hardship, then you may apply for a Taxpayer Assistance Order by filing IRS Tax Form 911 with an IRS Problem Resolution Office in the IRS district where you live. While this is being reviewed by the IRS, tax enforcement actions by the IRS will be suspended;
  • The IRS must agree to a three (3) year installment payment schedule for tax if a taxpayer who owes $10,000 or less, exclusive of interest and tax penalties, requests an installment arrangement from the IRS and certain conditions are met; 
  • The tax law generally requires an IRS supervisors approval before a notice of tax lien or tax levy may be issued to a taxpayer. Before the IRS may enforce a tax lien by levy, the IRS must provide a tax notice to the taxpayer within five (5) business days after the filing of a tax lien. The tax notice must indicate the amount of tax owed and explain the IRS's proposed action and the taxpayers rights to a hearing within thirty (30) days before an IRS appeals officer. The tax notice must also explain the IRS tax levy procedures, the availability of IRS administrative appeals and the IRS appeal procedures, the alternatives to the proposed tax levy such as an installment agreement, and the tax rules for obtaining a release of the tax lien.
  • Burden of Proof. Under certain circumstances the taxpayer may shift the burden of proof in court to the IRS with respect to factual issues relevant to determining tax liability.
  • Certain properties are exempt from IRS seizure. The weekly amount of wages exempt from IRS seizure is equal to your standard tax deduction plus allowable personal tax exemptions divided by 52. The amount of personal property exempt is $6,250 for fuel provisions, furniture, and household effects. The exempt amount for tools, books, machinery, or equipment used in a business or profession is $3,125. Non-exempt business property may not be seized unless an IRS District or IRS Assistant District Director determines that the taxpayer's other assets are insufficient to satisfy the tax liability or that the collection of tax is jeopardized. A personal residence is exempt from seizure if the unpaid tax liability is $5,000 or less. If the unpaid tax liability exceeds $5,000 the IRS must obtain written approval from a U.S. District Court judge to seize the taxpayers personal residence. Before the IRS may seize property, it must give thirty (30) days notice so you can contest the tax levy if it is erroneous. (The IRS can freeze the assets during the waiting period). The tax notice must clearly describe the tax levy procedures, your options for avoiding the tax levy, such as beginning installment payments for overdue tax, and steps for redeeming property if it is seized by the IRS. A bank will hold your account for twenty-one (21) days after receiving notice of an IRS tax levy before turning over the money to the IRS. This freeze allows you time to contact the IRS. If the IRS attempts to tax levy your property after you have paid the underlying tax liability or after the statute of limitations has expired, or if the property is exempt under bankruptcy rules, then you should appeal to the IRS to release the tax levy. Send a written statement to the IRS District Director of the IRS district in which the tax lien was filed explaining your grounds for appeal;
  • Issue a tax refund of overpaid tax;
  • Provide 30 days notice prior to altering, modifying or terminating an installment payment agreement;
  • Reasonable legal costs incurred during certain administrative proceedings may be recovered if you prevail in court against the IRS. 
  • In your interactions with the IRS, you have specific rights, too:
  • Representation - You may consult with and be represented by a tax adviser, attorney, or other tax professional when dealing with the IRS. The IRS must clearly inform you in IRS Publication 1, Your Rights as a Taxpayer, of the right to be represented by an accountant, attorney, or other tax professional. Once the taxpayer has chosen a representative, the IRS may not interview the taxpayer alone, unless consent is given. You may give a written power of attorney to a lawyer, CPA, or Enrolled Agent to represent you at an IRS tax audit. You do not have to attend the IRS tax examination unless the IRS issues you an administrative summons. The attorney-client privilege has been extended under certain circumstances to all non-attorney tax practitioners authorized to practice before the IRS, including Certified Public Accountants, Enrolled Agents, and Enrolled Actuaries.
  • Recording conferences with the IRS - You may record an IRS interview at your own expense if you give 10 days’ notice; likewise, the IRS may record a conference if you are informed 10 days in advance.
  • Interruption of an IRS tax audit - You can suspend an IRS tax audit in progress at any time to consult with your professional advisor.


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