What Is The IRS Taxpayer Bill of Rights?
Deep inside Title 26 of the US Code, in section 7803, live ten promises that the Internal Revenue Service has made to taxpayers. Here you can see, in plain language, what you as a taxpayer have the right to expect from the IRS in terms of tax collection, refunds, examination, and appeal. Collectively, these guarantees are known as the Taxpayer Bill of Rights.
History of the Taxpayer Bill of Rights
The list was created in 2014 when the Taxpayer Advocate Service, the agency’s internal watchdog, collected rules that already existed within the IRS Code and bundled them into ten categories. Nina Olson, the National Taxpayer Advocate, said at the time that “surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS and even fewer can name their rights.”
To clarify the situation, the agency embedded these ten rights into the IRS Code, under the heading of what the Commissioner must ensure every IRS employee is aware of. Taxpayers are also sent this list whenever they communicate with the IRS. The rights every taxpayer has are as follows:
#1: The Right To Be Informed
“Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.” (Read more)
The first one is a bit meta: it involves your right to know exactly where you stand with the IRS, including your right to know this bill of rights itself. Moreover, it states that in any interaction you need to be informed of what the process entails, the status of your case, and the details of any judgment made against you.
The upshot: The IRS promises to deal with taxpayers on the level, with facts and laws made transparent, like in a legal case.
#2: The Right to Quality Service
“Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to have a way to file complaints about inadequate service.” (Read more)
This right pertains to access to resources and the quality of customer service. The IRS needs to provide you information about leveraging the Taxpayer Advocate Service, and if you’re eligible, the Low Income Taxpayer Clinic (LITC). They commit to providing courteous treatment according to various guidelines, like only contacting you between the hours of 8AM and 9PM.
The upshot: Getting in touch with the IRS and its resources should be easy and straightforward.
#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 interest and penalties, and to have the IRS apply all tax payments properly.” (Read more)
This item pertains to your right to request a correction to overages you might be charged. For example, you have the right to challenge, in U.S. Tax Court, any adjustment in the amount of taxes you owe. You can similarly petition to be refunded any overages you may have paid, and to remove any interest that was caused by the IRS’s errors or delays.
The upshot: Both the taxpayer and the IRS should be fully on the same page regarding the amount owed.
#4: The Right to Challenge the IRS’s Position and Be Heard
“Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.“ (Read more)
Before protesting a decision in an independent forum (see the next item) the IRS case workers want you to know that they’re open to working out the issue directly. Before the IRS begins to enforce a tax debt, for example, they generally must provide you with an opportunity for a hearing, at which you can present your own case.
The upshot: “Be heard” is the important part. Before sending a case to an outside forum, the IRS will try, in good faith, to resolve any dispute based on evidence provided by the taxpayer.
#5: The Right to Appeal an IRS Decision in an Independent Forum
“Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.” (Read more)
If dealing with the issue directly doesn’t work, taxpayers generally have the right to appeal to an independent office within the IRS. Also, in a few limited cases, taxpayers can ask a court to determine an issue before a dispute with the IRS arises. The example cited is if an organization wants to determine whether they are tax-exempt—a clear reference to one of the events that spurred the creation of this bill of rights in 2014, the IRS Tea Party targeting controversy.
The upshot: The recourses available to taxpayers vary widely from case to case, but generally, the IRS wants to ensure due process with all its rulings.
#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. Taxpayers have the right to know when the IRS has finished an audit.” (Read more)
This is a statement of timelines for action, both on the part of the taxpayer and the agency. The IRS generally has three years from the date your return was filed to assess the tax. They have ten years from the assessment date to collect unpaid taxes from you. You can file a claim asking for the return of a refund within three years of the date you filed your original return, and so on.
The upshot: IRS actions adhere to statutes of limitation that vary by case.
#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, and will respect all due process rights, including search and seizure protections and a collection due process hearing where applicable.” (Read more)
The original Bill of Rights meets the Taxpayer Bill of Rights. The IRS is making an important statement here about the limits of what they’ll collect from taxpayers and how they’ll do it. For example, they can’t seize your principal residence without first getting court approval. A portion of your wages equal to the standard deduction plus any personal exemptions is protected from IRS seizure.
The upshot: The IRS tries to balance the government’s need to collect taxes with the taxpayer’s concern that the process not be more intrusive than necessary.
#8: The Right to Confidentiality
“Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect the IRS to investigate and take appropriate action against its employees, return preparers, and others who wrongfully use or disclose taxpayer return information.” (Read more)
This is one of the more important guarantees the IRS makes, given the data they have on every taxpaying American. The IRS promises not to disclose your tax information to third parties unless you authorize it. Communications between you and a tax lawyer are privileged. The IRS generally can’t contact third parties (your neighbors, your job) to obtain information about your tax liability. And if someone like a tax preparer does disseminate your tax information without your consent, they face civil penalties.
The upshot: The IRS wants you to trust it with your most sensitive data.
#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. Taxpayers have the right to be told that if they cannot afford to hire a representative they may be eligible for assistance from a Low Income Taxpayer Clinic.” (Read more)
You can also select an attorney, CPA, or other “enrolled agent” to represent you in an interview with the IRS. Moreover, the agency must suspend an interview with you if you wish to consult with one of those representatives.
The upshot: Just like in a legal case, taxpayers are entitled to enlist outside counsel.
#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 underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to 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 through its normal channels.” (Read more)
In a different context, promising a fair and just tax system would be an ideological minefield. Here in IRS-land, it’s a catch-all promise to adhere to certain procedures and regulations. This right runs the gamut from allowing you to appeal for relief from certain penalties if you “have acted with reasonable care” to entering a payment plan with the IRS to actioning against an unscrupulous tax preparer.
The upshot: It’s reasonable to expect that the IRS will adhere to any regulations that apply to your case.
The original Bill of Rights were broad, plainly stated legal concepts that dictated the power of laws that came after. The Taxpayer Bill of Rights, by contrast, is a patchwork taxonomy of existing IRS policy, which in general is dense and circumstance-dependent. As a result, many of these “rights” are actually rough approximations of what you, the taxpayer, can expect.
For example, in #6, the Taxpayer Advocate explains that “Generally, you will only be subject to one examination per taxable year. However, the IRS may reopen a taxable year that has been previously examined if the IRS finds it necessary (e.g., there is evidence of fraud).” Most of these promises are similarly ridden with caveats.
Ultimately, it’s paramount to understand the regulations that apply to your case. With 76,000 employees collecting $3.4 trillion in taxes, there are bound to be exceptions to every rule the IRS could create. Staying on the right side of those regulations is a matter of working with the agency if a dispute arises, keeping good records, and knowing your rights.