One of the most beautiful things we have in America is our rights. But did you know that you also have certain rights as a taxpayer? The IRS has a Taxpayer Bill of rights - these are 10 main rights that exist for all who pay taxes to the IRS. Let's dig in!
1. The Right to Be Informed
If you don’t know what’s happening, you can’t be expected to comply with tax laws accordingly! This right means you are entitled to clear explanations of all things IRS. If your refund claim is disallowed, the IRS must issue the reasoning for it. Similarly, if you owe money, you should be notified through the proper channels with a clear explanation of the situation. Should you meet with an IRS during an audit process, they must clearly explain the process and the rights you have during the process. The IRS must provide information that is clearly written and accessible to taxpayers.
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2. The Right to Quality Service
As a taxpayer, the IRS is required to give you quality service. This can mean a few things including being accessible if you need to contact them, courteous when collecting taxes, and providing additional information if you are eligible for assistance.
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3. The Right to Pay No More than the Correct Amount of Tax
This one might seem like a no-brainer, but it’s a right that you have! If the IRS needs to adjust the amount you owe, they will send you statutory notice of deficiency through the correct channels. If this happens, you have a right to challenge the proposed changes. If you accidentally overpay taxes, there’s even a window of time when you can ask for money back. This also applies to interest taxes paid that were delayed on the IRS side.
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4. The Right to Challenge the IRS’s Position and Be Heard
If you see something wrong, you have the right to object. There are proper procedures to go through. There are certain statutes of limitation here, too. For example, you have 60 days to inform the IRS of a mathematical error made while calculating taxes. If the IRS disagrees with your objection, they will send you a statutory notice of deficiency explaining why their disagreement stands. You also have a right to a hearing before the IRS collects a tax debt by levying.
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5. The Right to Appeal an IRS Decision in an Independent Forum
You have a right to receive a written response about the Office of Appeals’ Decision because you are entitled to fair and impartial administrative appeal. You even have the right to tax cases to tax court. There are a few different things you can request based on your situation: you can request an administrative appeal, conference with the Office of Appeals, an independent review by the Office of Appeals.
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6. The Right to Finality
This right means there is a finite time in which you can challenge an IRS position as well as a maximum amount of time that the IRS has to issue an audit. Along those same lines, you have the right to know when an audit is finished. There are different levels of finality depending on the situation, but you have a right to be informed as a taxpayer.
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7. The Right to Privacy
This right assures you that the IRS will interfere any more than necessary to complete their task. The IRS is also responsible for following official procedures and inform you along the way. The IRS cannot seize your personal property, and there are specific notices and procedures that you must be notified of if they need to seize your personal residence.
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8. The Right to Confidentiality
Similarly to the Right to Privacy, you have the right to believe that any information disclosed by the IRS is done so in complete confidentiality. If the IRS violates this right, there are procedures in place to address the situation. Like attorney-client or doctor-patient privilege, there is a similar privilege that applies to individuals who are authorized to do taxes (like a CPA!)
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9. The Right to Retain Representation
Similarly to other situations, a representative can be assigned to you if you cannot afford to hire someone to represent you in IRS dealings. This representative could be an attorney, CPA, or enrolled agent who can help you during an IRS interview.
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10. The Right to a Fair and Just Tax System
As a taxpayer, circumstances that might affect your ability to pay taxes will be taken into consideration. If you cannot pay your tax, the IRS has payment plans in place, and there are also methods to eliminate taxes owed under certain conditions. If you experience mental or physical health issues, there are also certain measures you can take, and you may qualify for some lifted penalties. The IRS has a Taxpayer Advocate Service to help taxpayers who cannot currently pay their taxes due to hardships.
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Disclaimer: The views presented in this post are meant as educational resources and should not be taken as direct advice for your personal finances or small business. Should you have questions regarding a post relating to your specific finances, please contact us at info@practicalaccountingva.com.