I speak to so many taxpayers and business owners who think they are helpless when it comes to dealing with the Internal Revenue Service (IRS). While I understand the feeling, that idea is actually not true at all. In fact, each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These rights are collectively known as the Taxpayer Bill of Rights and are taken directly from the tax code. Let’s look at the Taxpayer Bill of Rights so you can get a better understanding of your rights when it comes to challenging the IRS when needed.
According to the IRS and the Bill of Rights, taxpayers have the following rights:
The right to challenge the IRS’ 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.
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.
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 or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.
So, how do these rights play out when there’s a tax issue in question and how does the taxpayer should respond?
In some cases, the IRS will notify a taxpayer that their tax return has a math or clerical error. If this happens, the taxpayer:
- Has 60 days to tell the IRS they disagree.
- Should provide copies of any records that may help correct the error.
- May call the number listed on the letter or bill for assistance.
- Can expect the agency to make the necessary adjustment to their account and send a correction if the IRS agrees with the taxpayer’s position.
If the IRS does not agree with the taxpayer’s position, the IRS may send a notice proposing a tax adjustment. This notice provides the taxpayer with a right to challenge the proposed adjustment in the U.S. Tax Court before paying it. If the taxpayer chooses to do this, they must file a petition within 90 days of the date of the notice, or 150 days if it is addressed outside the United States.
Taxpayers can submit documentation and raise objections during an examination or audit. If the IRS does not agree with the taxpayer’s position, the agency issues a notice explaining why it is increasing the tax. Prior to paying the tax, the taxpayer has the right to petition the U.S. Tax Court and challenge the agency’s decision.
In some circumstances, the IRS must provide a taxpayer with an opportunity to have a hearing with the Independent Office of Appeals before taking enforcement actions to collect tax debt. These actions can include levying the taxpayer’s bank account or other property or filing a notice of federal tax lien in the appropriate state filing location. If the taxpayer disagrees with the Appeals decision, they can petition the U.S. Tax Court.
While the Taxpayer Bill of Rights is there to protect you, I always recommend that individual taxpayers and business owners first consult with a tax attorney or professional when it comes to dealing with the IRS. An experienced tax professional or San Francisco tax attorney can help you deal with the IRS and answer any questions or concerns about your rights as a taxpayer.
Allison Soares is a partner and tax attorney at Vanst Law LLP. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits from San Francisco to San Diego.
