Know Your Rights as a Taxpayer

By Mark Cussen Markets Fool.com

Dealing with the IRS can be an intimidating proposition for many taxpayers, but that's partly because most Americans are unaware of the rights they have under our tax code. The IRS sought to rectify this by creating a Taxpayer's Bill of Rights in 2014. This document outlines the rights and privileges that are accorded to all taxpayers in their dealings with the IRS. This bill stands as a guarantee that the IRS will not abuse its power over taxpayers.

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The taxpayer's Bill of Rights contains the following 10 provisions.

Image source: Getty Images.

1. The Right to Be Informed
Taxpayers are entitled to a clear explanation of what they need to do in order to comply with the tax laws. They are also entitled to be told about IRS decisions regarding their tax accounts and to receive a clear explanation of the outcome. For example, if a taxpayer's return is audited and the IRS determines that he or she owes additional tax, then that person is entitled to receive a clear written explanation of what they owe, why they owe that amount, and when the additional payment is due. They also have the right to contest the IRS' decision if they feel that it's incorrect.

2. The Right to Quality Service
IRS employees are required to provide all taxpayers with prompt and courteous service and to communicate with taxpayers in a clear and understandable manner. Taxpayers who feel that they have received inadequate service also have the right to speak to a supervisor in order to get their issues resolved. People often have to endure long waits before they can get through to an IRS representative on the phone, but once they have the chance to speak to someone, they have the right to have their issues or questions resolved or answered in an expeditious manner. And while there is often a lag between when a taxpayer sends their money or other documentation to the IRS and when they receive a written response, the IRS is still required to process the taxpayer's response as quickly as possible once they receive it.

3. The Right to Pay No More than the Correct Amount of Tax
Taxpayers are only required to pay the tax that is due on their tax return each year, along with any applicable interest and penalties and nothing more. If they make a tax payment, they have the right to have that payment applied to their accounts correctly, at the time it is received, and for the correct tax year.

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4. The Right to Challenge the IRS' Decision and Be Heard
As mentioned previously, taxpayers have the right to object to any decision that the IRS renders pertaining to their accounts, and they can provide additional documentation to support their argument. The IRS must consider these objections in a timely and objective manner, and it must provide a clear response if it disagrees with the taxpayer's position.

5. The Right to Appeal an IRS Decision in an Independent Forum
Almost any decision that is made by the IRS can be appealed by the taxpayer. The first place they can go is the Office of Appeals, where they can get a representative to review their case and possibly render a different decision regarding their issue. The Office of Appeals is required to send a written response to the taxpayer that clearly explains its decision. If the Office of Appeals is unable to resolve their issue or backs up the original decision made by the IRS, then taxpayers can take their cases to tax court in most instances.

6. The Right to Finality
If the IRS imposes a deadline for when a taxpayer must respond to them regarding an issue, they must clearly communicate this date to the taxpayer as soon as possible so that they have a reasonable amount of time to prepare their response. There is also a statute of limitations imposed on the IRS that limits the maximum amount of time that the IRS has to audit a particular tax year or collect a tax debt, and taxpayers have the right to know the date of this deadline. Taxpayers also have the right to know when the IRS has completed an audit.

7. The Right to Privacy
Taxpayers can expect the IRS to be as unobtrusive as possible whenever it conducts any type of inquiry, examination, or enforcement action. The IRS must also obey all applicable laws and respect all rights of due process, including search and seizure provisions. It must also provide a due process of hearing if any collection action is taken, if necessary.

8. The Right to Confidentiality
The IRS is required to keep all taxpayer information strictly confidential in all dealings with taxpayers. No information that a taxpayer provides to the IRS can be disclosed to another party unless it has been specifically authorized by the taxpayer or by law. Taxpayers can expect that any IRS employee or tax preparer who breaches this rule will face punitive action.

9. The Right to Retain Representation
Taxpayers have the right to obtain representation on their behalf in their dealings with the IRS. If they don't have the money to do this, then they can seek help from a Low Income Taxpayer Clinic.

10. The Right to a Fair and Just Tax System
The IRS is required to consider the taxpayer's circumstances regarding their ability to pay or furnish information that is requested. Taxpayers also have the right to get help from the Taxpayer Advocate Service if they're having financial difficulties or if the IRS has not been able to resolve their issue through normal channels.

The Taxpayer's Bill of Rights was created to ensure that taxpayers are treated fairly and equitably under our tax system. Taxpayers who have a dispute with the IRS must be treated in a prompt, professional manner and be allowed to state their case and present their argument. In 2015 these 10 rights were incorporated into the Internal Revenue Code. Taxpayers who think they have been treated unfairly or discriminated against can email a complaint at edi.civil.rights.division@irs.gov. For a mailing address and more information on filing complaints, visit this IRS website.

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