Taxpayers’ Rights Regarding the IRS

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In the mid-1990s, the poor treatment many taxpayers received from the Internal Revenue Service (IRS) produced a national effort to establish the rights of taxpayers in dealings with the IRS. In 1996, Congress passed a Taxpayer Bill of Rights Act, which established a Taxpayer Advocate Service within the IRS. Two years later, following hearings investigating IRS abuses of power, Congress passed the IRS Restructuring and Reform Act to restructure the IRS and make it more responsive to taxpayers. This legislation is the starting point for understanding the rights of taxpayers in relation to the IRS, rights that are of particular interest to taxpayers filing the estimated 5 million individual and business returns that annually end up being audited or in some other dispute with the IRS.
If you have questions about your rights as a taxpayer, schedule a consultation with a tax lawyer at our firm.

Taxpayer Bill of Rights

Congress first passed a Taxpayer Bill of Rights in 1988, and did so a second time in 1996. The provisions of the 1996 legislation include:

  • Taxpayer assistance orders, providing relief for taxpayers who might suffer hardship due to an enforcement action
  • Increased right to appeal liens or seizures, either before or after a collection action
  • Greater notice prior to making a levy and issuing summons to a third party
  • Administrative appeal of liens
  • Awards for reasonable costs (administrative and litigation) when the IRS takes unreasonable positions
  • Damages for disclosure of return, failure to properly release lien and unauthorized enforcement actions

The legislation also created the Taxpayer Advocate Service, an independent organization within the IRS, to provide an independent assurance that tax problems not resolved through the normal procedures are handled promptly and fairly.

IRS Restructuring and Reform Act

In 1998, Congress added further taxpayer rights by passing the IRS Restructuring and Reform Act. The provisions of that legislation include:

  • Burden of proof in civil cases involving tax disputes shifted from taxpayer to the IRS
  • Suspension of penalties and interest if the IRS waits more than 18 months to inform someone that additional taxes are owed
  • Protection from collection actions in certain cases for people whose tax problems were caused without their knowledge by their spouse
  • Expanded powers for the Taxpayer Advocate Service to grant taxpayer assistance orders, halting tax collections in cases of potential hardship
  • Tax relief such as reduction of the long term capital gains holding period; education incentives; principal residence gain exclusions; EIC expansion; new IRAs; and estate and gift provisions
  • Expansion of rights or privileges in the areas of interest calculations for taxes and refunds; liens, levies and seizures; audit criteria; tip reporting; offers in compromise and installment agreements; new “due process” requirements; more inclusive innocent spouse provisions; and third party summonses

How Does the Taxpayer Advocate Service Work?

The Taxpayer Advocate Service provides an independent advocate to taxpayers who are involved in disputes with the IRS. Taxpayers may be eligible for help from the Taxpayer Advocate Service if (1) they are experiencing economic harm or significant cost; (2) it has taken longer than 30 days to resolve the tax issue; or (3) the IRS has not responded to the problem within the time period promised by the IRS. The advocates, as part of the IRS, are knowledgeable about the tax system. The advocates will listen to taxpayer’s problems, explain what steps need to be taken to have them resolved and be there for the taxpayer until a resolution is reached. The service is free and confidential.

Speak to a Tax Attorney

If you are involved in a tax dispute with the IRS, an experienced tax attorney at our firm can help ensure that your rights are respected.

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