In 2014, the US Government passed the taxpayers Bill of Rights to protect a taxpayer’s fundamental rights when dealing with the IRS (For more information read: Make Way for the U.S. Taxpayers’ Bill Of Rights). Here is a brief overview of these tax rights covered under the taxpayer bill of rights prepared by AG Tax analysts. It is important that all US taxpayers be aware of their basic fundamental taxpayer rights to avoid being caught off-guard in case a tax situation or controversy arises.
IRS Tax Rights
The Right to Be Informed
The right to be informed provides taxpayers the right to question and ask for explanation related to any tax rule, tax forms, and tax procedure that they do not understand; or for clarification regarding any notice issued, interest and penalties owed, a cancelled refund, or any decision made by the IRS regarding a taxpayers tax account, and/or any other IRS-related tax issue.
The Right to Quality Service
This right ensures that if a taxpayer has any tax-related query, the IRS should be able to provide taxpayers with quick, prompt, courteous, and professional assistance in their dealings with the IRS. Information provided should be easily understood by the taxpayer. IRS representatives are required to listen to the taxpayers and provide accurate and clear information; in some cases the IRS correspondence made must include the name, phone number, and unique identifying number of the IRS employee they have contacted.
The Right to Pay No More than the Correct Amount of Tax
If taxpayers receive an IRS notice/bill, they have the right to write to the IRS office within the stipulated period regarding the notice, and ask for clarification. However if an error is discovered, the taxpayer has the right to file an amended return, and in case the taxpayer cannot pay the required amount, he/she can request for an offer in compromise of the tax debt and ask the IRS to possibly accept less than the full amount.
The Right to Challenge the IRS’s Position and Be Heard
If the IRS has issued a notice to a taxpayer, the taxpayer may raise an objection within the stipulated period along with the necessary supporting documents against the IRS decision. After receiving such objection, the IRS is supposed to consider and act upon it at its earliest convenience. That being said, the period for disagreeing with a mathematical or clerical error is 60 days, and, in case of a notice of deficiency, the right to file a petition and challenge the proposed adjustment in a U.S. tax court is 90 days from the date of the notice (150 days if the notice is addressed to you outside the United States).
The Right to Appeal an IRS Decision in an Independent Forum
As mentioned in the above point, the taxpayer can appeal against an IRS decision. The taxpayer may first contact the IRS regarding the decision, and in case of dissatisfaction, he/she may appeal the decision. The IRS Office of Appeals is separate and independent from the IRS office that initially reviewed your case. If you are unsatisfied with the results of the appeal you may challenge the decision in Court. In case of refund claims, a taxpayer may file a refund suit in Court if no action is taken by the IRS within 6 months of the refund request. You generally have only two years to file a refund suit from the date the IRS informs you that your claim is denied.
The Right to Finality
Just like a taxpayer has a limited period to take action against an IRS decision, similarly the IRS has to inform a taxpayer when an audit is complete, the time-period within which the IRS may audit a particular year’s tax return (unless it is a fraudulent return) and to collect a tax liability.
The Right to Privacy
Under this right, the IRS cannot be more intrusive than required during a tax inquiry, examination or an audit. Additionally, the IRS can garnish wages and/or personal items only up to a certain extent, in case of non-payment of taxes after multiple notices. Having said that, the IRS cannot seize a taxpayer’s primary residence without court approval, nor can it question the taxpayer’s lifestyle if there is no indication of unreported income.
The Right to Confidentiality
In general the IRS is not supposed to disclose a taxpayer’s information to third parties, such as: the taxpayer’s employer, neighbor, financial advisor, return preparer, bank or other financial institution, etc., unless authorized by the taxpayer or by law. This right ensures that in case of such events, the taxpayer has the right to take appropriate recourse.
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 seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation. Provided the qualified representative (such as a lawyer, CPA, or enrolled agent) is not disbarred or suspended from practice before the IRS, the taxpayer may submit a written power of attorney to authorize an qualified individual to represent a taxpayer before the IRS.
If your current income is below a certain level, you may ask a Low Income Taxpayer Clinic (LITC) to represent you (for free or a minimal fee) in your tax dispute before the IRS or a federal court. Many LITCs offer services in languages other than English. Although LITCs receive partial funding from the IRS, LITCs, their employees, and their volunteers are completely independent of the IRS.
The Right to a Fair and Just Tax System
US 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. US 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. Additionally, providing them an opportunity to make payments in various other qualifying ways in case a taxpayer cannot immediately pay off a tax debt.
Just like US taxpayers have a set of tax duties, they have a set of tax rights too. It is the taxpayer’s responsibility to ensure that these basic rights are provided to them when dealing with the IRS, making it all the more necessary for taxpayers to be aware of these rights. Nonetheless, one can always consult a tax professional in case of a tax situation or controversy.
AG Tax LLP Can Help
Tax situations can be complex and burdensome, if you have any tax-related queries or need assistance with tax planning or filing please contact AG Tax. Our tax professionals are highly-experienced with US and Canadian tax laws and can provide you the right guidance to handle your tax situation.
Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to US, Canadian, and other international tax laws.
We can assist with:
- Canadian Personal and Corporate tax returns
- Cross Border Taxation and Business Planning
- US Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
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Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
