Taxes are rarely an enjoyable experience. Filing a return is stressful, the system and rules are constantly changing, and it can seem like audits are random and unfair, but it’s important to know you are not completely at the mercy of the Internal Revenue Service (IRS). The agency has to respect your rights as a taxpayer, which includes clear communication, fair rules, and prompt, professional service as outlined in the Taxpayer Bill of Rights
The relationship between you and the IRS isn’t as imbalanced as it often feels. The Bill of Rights outlines your fundamental rights as someone who makes United States tax payments. This guide will help you understand what that means and why it’s important.
What Is the Taxpayer Bill of Rights?
The Taxpayer Bill of Rights was initially a bill that passed Congress in 1988 and was amended in 1996. National Taxpayer Advocate Nina Olson worked for years to get these rights added to the Internal Revenue Code, and it was enacted in 2014. Here are some facts to keep in mind:
- These rights were already outlined throughout existing tax laws, so adding it to the code didn’t bring about any new rules.
- The complex nature of the Internal Revenue Code means most people haven’t read it.
- That means that most people in the U.S. may not be aware of their fundamental rights when dealing with the IRS.
- Some states have their own taxpayers’ Bill of Rights outlined in their state tax laws.
The IRS has a reputation of being intimidating, even frightening. People are often under the impression that it is an absolute power, an organization that makes income tax filing intentionally complicated and offers no recourse for you if something goes wrong. That’s simply not true. The tax system is complex and frustrating for a lot of people, but, by law, the Department of Revenue is not intentionally antagonistic.
A taxpayers’ Bill of Rights, clearly outlined in the code, is a way to help clarify (and ensure more people are made aware of) your rights as a taxpayer.
Your 10 Fundamental Rights as a U.S. Taxpayer
Understanding your rights is key to ensuring you pay the right amount of tax and know you can appeal a penalty abatement rejection or respond to a dispute about your deductions, among other things. These are the 10 fundamental rights as outlined in the Bill of Rights:
1. The Right to Be Informed
Tax information needs to be clear and accessible. The IRS is obligated to explain income tax laws, filing procedures, and more in a way you can understand.
2. The Right to Quality Service
You can expect prompt, professional service when you’re dealing with IRS employees, and you have the right to escalate your concerns about poor interactions. In that way, it’s like a retail store or a bank: You can ask to speak to a supervisor if you’ve been treated in a disrespectful or unprofessional manner, or if the person you’re working with isn’t able to help you.
3. The Right to Pay No More Than the Correct Amount of Tax
The IRS should apply your tax payments appropriately, including penalties and interest when applicable, and you do not have to pay additional taxes on top of what you legally owe. That means you will be refunded if it is discovered you have overpaid.
4. The Right to Challenge the IRS’s Position and Be Heard
You can object to a decision and offer additional documentation to support your case, knowing the IRS needs to consider your objection and respond promptly. It does make mistakes, and if you recognize one, it’s your right to draw attention to it and insist on a fair tax assessment.
5. The Right to Appeal an IRS Decision in an Independent Forum
You can appeal an IRS decision in a fair, impartial forum and expect a written response about the decision on the appeal. These appeal rights are essential, because they serve as a check on the power of the IRS.
6. The Right to Finality
You have the right to be aware of all the timelines impacting your account, including payment due dates, the appeal window, and when the IRS has completed an audit.
7. The Right to Privacy
You can expect the IRS to follow due process, limit their intrusion into your life, and follow all laws regarding inquiries, audits, and more.
8. The Right to Confidentiality
Your information is protected unless you choose to disclose it (or in cases where disclosure is required by law). You can expect appropriate legal action against IRS employees, tax preparers, and others who violate your confidentiality.
9. The Right to Retain Representation
You’re not alone when figuring out complex income tax situations or defending yourself in tax court. You can work with a tax lawyer when dealing with the IRS during an audit or disputes.
10. The Right to a Fair and Just Tax System
The IRS can be expected to consider your unique situation as a taxpayer, including situations that make payment or deadlines difficult. The Taxpayer Advocate Service is available to help taxpayers navigate those circumstances, and is useful if the IRS has not resolved a situation for you in a timely manner.
Become an Informed Taxpayer
Getting familiar with the taxpayers’ Bill of Rights is part of becoming an informed taxpayer. Understanding them allows you to file your income tax return with more confidence, knowing your rights are protected by law and you have options if you’re audited or have another issue.
Unfortunately, our tax system will probably never be simple, but there’s help. The IRS website offers a wealth of information, and you can always discuss your situation with an accountant and/or a tax lawyer who has a complete understanding of tax laws and how they affect you. Contact Silver Tax Group today to speak with an expert about any taxpayer Bill of Rights questions you might have.