Similar to a suspect in a criminal investigation, the taxpayer in an audit is guaranteed certain rights. Publication 1, Your Rights as a Taxpayer, is an IRS document containing the Taxpayer Bill of Rights and summaries of the various processes that occur during an audit.
The Taxpayer Bill of Rights is a collection of 10 assurances relating to the treatment of the taxpayer and the limitations of the IRS. Publication 1 specifically states these rights as followed:
- The Right to Be Informed
Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.
- The Right to Quality Service
Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.
- The Right to Pay No More than the Correct Amount of Tax
Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.
- The Right to Challenge the IRS’s 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.
- The Right to Privacy
Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.
- The Right to Confidentiality
Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.
- 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.
- The Right to a Fair and Just Tax System
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. 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.
In summary, the Taxpayer Bill of Rights basically guarantees that the taxpayer will be sufficiently informed about the actions and requests of the IRS and to be treated fairly by the IRS. This document is important in that is assures the taxpayer will be informed on why they are being audited and how the audit is going to affect them. It also assures that the IRS won’t overstep their bounds or take advantage of the taxpayer by granting rights to privacy and representation.
Unfortunately, IRS agents are well aware that most Americans have almost no understanding of the tax code nor do they know their rights during an audit. This leads to not only the IRS gaining more information than they’re entitled to but also the taxpayer unintentionally incriminating themselves, especially during office and field audits. Your rights are best protected with proper representation. Here at the Law Offices of Jef Henninger, Esq., we work to protect you from the IRS overreaching and to wrap up your audit as quickly as possible.