Taxpayer Rights: What You Should Know

Navigating the complexities of the U.S. tax system can be daunting, especially when dealing with the IRS. However, understanding your rights as a taxpayer can empower you to protect yourself and ensure fair treatment. Whether you're facing an audit, dealing with tax collection, or appealing an IRS decision, knowing your rights is crucial.

The Taxpayer Bill of Rights

The Taxpayer Bill of Rights is a critical framework designed to protect taxpayers and ensure they are treated fairly by the IRS. This set of ten fundamental rights provides a clear outline of what taxpayers can expect when interacting with the IRS, empowering them to navigate tax processes with confidence and clarity.

The Ten Fundamental Rights

1. The Right to Be Informed

Taxpayers have the right to know what they need to do to comply with the tax laws. This includes clear explanations of the laws, IRS procedures, and all related tax forms, instructions, publications, notices, and correspondence. The IRS is responsible for providing accurate and understandable information to ensure taxpayers can fulfill their obligations and understand their tax responsibilities.

2. The Right to Quality Service

Taxpayers are entitled to receive prompt, courteous, and professional assistance in their dealings with the IRS. This right ensures that taxpayers are spoken to in a manner they can understand, receive accurate information, and are treated with respect. The IRS must ensure that its representatives provide high-quality service and assistance.

3. 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 any interest and penalties. This right protects taxpayers from being overcharged and ensures that all tax payments are applied correctly. The IRS is responsible for making accurate calculations and adjustments to reflect the correct tax liability.

4. The Right to Challenge the IRS’s Position and Be Heard

Taxpayers can raise objections and provide additional documentation in response to formal IRS actions or proposed actions. This right ensures that taxpayers have an opportunity to present their case and that the IRS must consider their timely objections and documentation. If the IRS does not agree with the taxpayer's position, the taxpayer has the right to receive a response.

5. The Right to Appeal an IRS Decision in an Independent Forum

Taxpayers have the right to a fair and impartial administrative appeal of most IRS decisions, including certain penalties. This right ensures that taxpayers can take disputes to court or appeal within the IRS, and they have the right to receive a written response regarding the Office of Appeals’ decision. This independent review process helps ensure fair treatment.

6. 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. This right provides taxpayers with clear deadlines and the assurance that their tax matters will be resolved within a reasonable timeframe.

7. 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. The IRS must respect taxpayers' privacy and conduct all actions in a manner that is minimally invasive, ensuring that any required actions are justified and lawful.

8. The Right to Confidentiality

Taxpayers have the right to expect that their tax information will not be disclosed unless authorized by the taxpayer or by law. This right ensures that taxpayer information is protected from unauthorized disclosure, and appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

9. 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. This right ensures that taxpayers can seek professional assistance from a qualified tax professional, such as a CPA, enrolled agent, or tax attorney, to help them navigate complex tax issues and represent their interests.

10. 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 ability to pay or provide information timely. This right also includes the expectation that taxpayers can 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.

Rights During an IRS Audit

Audit Notification

One of the most critical rights during an IRS audit is the right to be informed. Taxpayers have the right to receive timely and clear notification about the audit process. This includes understanding why they are being audited, the scope of the audit, and the specific documentation required.

• Audit Notice: The IRS will notify you of an audit through a formal letter, not a phone call or email. This letter will outline the reason for the audit and provide instructions on what documentation you need to provide.
• Documentation Required: The notice will specify the records and documents you need to submit or make available for review, such as receipts, bank statements, and other financial records.

Representation

Taxpayers have the right to be represented by a qualified tax professional during an IRS audit. This can be a crucial aspect of ensuring that the audit process is handled properly and that the taxpayer’s interests are protected.

• Choosing a Representative: Taxpayers can choose to be represented by a CPA, enrolled agent, or tax attorney. These professionals can interact with the IRS on behalf of the taxpayer, helping to manage the audit process and negotiate with the IRS.
• Power of Attorney: To appoint a representative, the taxpayer must submit a power of attorney form (Form 2848) to the IRS. This form authorizes the representative to act on the taxpayer’s behalf.

Audit Process

Understanding the audit process is essential for taxpayers to navigate it effectively. Here’s what to expect during an IRS audit:

• Initial Contact: After receiving the audit notice, the IRS may request a face-to-face meeting, correspondence audit, or field audit. The type of audit will determine the level of interaction and documentation required.
• Meetings and Document Reviews: During the audit, the IRS will review the provided documents and may ask for additional information. This can include interviews with the taxpayer or their representative to clarify details.
• Timeline: Audits can vary in duration, depending on the complexity of the case and the responsiveness of the taxpayer. The IRS will communicate timelines and deadlines for submitting documents and responding to inquiries.

Rights During Collection

Payment Plans

Taxpayers who owe taxes but cannot pay the full amount immediately have the right to request a payment plan, also known as an installment agreement. This option allows taxpayers to pay off their tax debts over time in manageable monthly payments.

• Eligibility: Most taxpayers qualify for a payment plan. The IRS offers both short-term plans (up to 120 days) and long-term plans (more than 120 days).
• Application Process: Taxpayers can apply for a payment plan online, by phone, or by submitting Form 9465 (Installment Agreement Request). The IRS may require detailed financial information to approve a long-term payment plan.
• Fees and Interest: While payment plans help manage tax debt, interest and penalties will continue to accrue on the unpaid balance until the debt is fully paid. The IRS charges a setup fee for installment agreements, but this fee can be reduced or waived for low-income taxpayers.

Offer in Compromise

Taxpayers experiencing significant financial hardship may have the right to propose an Offer in Compromise (OIC), which allows them to settle their tax debt for less than the full amount owed.

• Eligibility: To qualify for an OIC, taxpayers must demonstrate that they cannot pay the full tax liability without causing financial hardship. The IRS considers factors such as income, expenses, asset equity, and overall ability to pay.
• Application Process: Taxpayers must submit Form 656 (Offer in Compromise) along with a detailed financial statement (Form 433-A or 433-B). An application fee and initial payment are also required.
• Evaluation Criteria: The IRS evaluates OIC applications based on three criteria: doubt as to liability, doubt as to collectability, and effective tax administration. If the offer is accepted, the taxpayer must comply with all future tax obligations.

Collection Appeals

If a taxpayer disagrees with a collection action, such as a levy or lien, they have the right to appeal the decision through the IRS Collection Appeals Program (CAP).

• Types of Collection Actions: Collection actions that can be appealed include levies on bank accounts or wages, liens on property, and the denial of installment agreements or OICs.
• Appeal Process: To appeal a collection action, taxpayers can submit Form 9423 (Collection Appeal Request). This form must be submitted within 30 days of the date on the notice of collection action.
• Independent Review: The IRS Office of Appeals, which is independent of the collection division, will review the appeal. The appeals officer will consider the taxpayer’s arguments and any supporting documentation before making a decision.

Innocent Spouse Relief

Taxpayers may seek relief from tax liability if they believe that their spouse or former spouse’s actions led to an unfair tax burden. There are three types of innocent spouse relief:

• Innocent Spouse Relief: This type of relief applies if the taxpayer can prove that they did not know, and had no reason to know, that their spouse understated the tax liability on a joint return.
• Separation of Liability Relief: This relief allocates the tax liability between the taxpayer and their spouse or former spouse, applicable if the taxpayer is divorced, legally separated, or no longer living with their spouse.
• Equitable Relief: If the taxpayer does not qualify for the other two types of relief, they may still be eligible for equitable relief if it would be unfair to hold them liable for the tax debt.
• Application Process: Taxpayers must file Form 8857 (Request for Innocent Spouse Relief) to request relief. The IRS will review the application and consider factors such as marital status, financial hardship, and the taxpayer’s knowledge of the tax understatement.

Rights During Appeals

Independent Review

Taxpayers have the right to an independent review of disputes with the IRS. This right ensures that decisions made by the IRS can be challenged and reviewed by an impartial body, providing a fair opportunity for taxpayers to present their case.

• Office of Appeals: The IRS Office of Appeals is an independent body within the IRS that reviews disputes impartially. It operates separately from the compliance functions of the IRS, ensuring an unbiased review.
• Fair Hearing: Taxpayers can request a fair hearing before an appeals officer who will consider their arguments and evidence without prior involvement in the case.

Appeals Process

Filing an appeal with the IRS involves several key steps. Here’s a detailed look at what taxpayers can expect during the appeals process:

1. Filing the Appeal:
   • Notice of Disagreement: If you disagree with an IRS decision, you must file a written protest or complete IRS Form 12203 (Request for Appeals Review) within the time frame specified in the IRS notice (typically 30 days).
   • Detailed Protest: For more complex cases, a detailed written protest may be required, outlining the specific items you disagree with, the reasons for your disagreement, and any supporting documentation.
2. Review by Appeals Officer:
   • Case Assignment: Once the appeal is filed, it will be assigned to an appeals officer who has not been involved in the case previously.
   • Documentation Review: The appeals officer will review the case file, including all relevant documentation and arguments presented by the taxpayer and the IRS.
3. Appeals Conference:
   • Informal Meeting: The appeals process often includes an informal conference, which can be conducted in person, by telephone, or by correspondence. During the conference, taxpayers and their representatives can present their case and discuss the issues with the appeals officer.
   • Negotiation: The appeals officer will attempt to resolve the dispute through negotiation and compromise, considering the taxpayer’s arguments and any additional evidence provided.
4. Decision Making:
   • Evaluation: The appeals officer evaluates all information and may request additional documentation or clarification from the taxpayer.
   • Settlement Proposal: In many cases, the appeals officer may propose a settlement that both parties can agree to. If a settlement is reached, the taxpayer will sign an agreement form, and the case will be closed.

Final Decision

At the conclusion of the appeals process, taxpayers have the right to receive a written response with the final decision. Here’s what to expect:

• Written Decision: The IRS will provide a written response outlining the final decision of the appeals officer. This document will explain the findings, the reasoning behind the decision, and any agreed-upon settlements or adjustments.
• Acceptance of Decision: If the taxpayer agrees with the final decision, they will sign any necessary agreements, and the case will be closed.
• Disagreement with Decision: If the taxpayer disagrees with the final decision, they have the right to take further action. This may include:
  • Tax Court: The taxpayer can file a petition with the U.S. Tax Court to contest the IRS decision further. This involves presenting the case before a tax court judge, who will make a final ruling.
  • Other Courts: In some instances, taxpayers may choose to take their case to other courts, such as the U.S. District Court or the Court of Federal Claims, depending on the nature of the dispute and legal advice.

Good News Tax Relief

Familiarizing yourself with your taxpayer rights is essential in managing your interactions with the IRS effectively. If you encounter any issues with the IRS, don’t hesitate to seek professional assistance. Contact Good News Tax Relief for expert guidance and support. Our experienced team is dedicated to helping you navigate the complexities of the tax system and ensuring your rights are upheld.

Good News Tax Relief,

LLC143 Cady Centre #145

Northville, Michigan 48167

Email: roberts@goodnewstaxrelief.com

Website: https://www.goodnewstaxrelief.com/

Contact us: https://www.goodnewstaxrelief.com/contact-us

Toll Free 1-800-255-7500

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