The Internal Revenue Code provides for the Taxpayer Bill of Rights. The Taxpayer Bill of Rights reflects a mandate that the IRS provide a level of service. The Bill of Rights raises questions, such as whether it is enforceable — and, if so, what remedies are available to a taxpayer for a violation of the Taxpayer Bill of Rights.
The TBOR was a result of the efforts of many, including the former Taxpayer Advocate, Nina Olsen, who prioritized congressional action and statutory adoption of the Taxpayer Bill of Rights as a "key legislative recommendation" in her 2007 annual report to Congress, urging that:
The United States tax system is based on a social contract between the government and its taxpayers - taxpayers agree to report and pay the taxes they owe, and the government agrees to provide the service and oversight necessary to ensure that taxpayers can and will do so. Without that unspoken agreement, tax administration in a modern democratic society could not function. Thus, the government's ability to raise revenue through voluntary tax compliance - the most efficient and economical form of tax compliance - rests on taxpayers' belief that the government will honor its end of the social contract.
The National Taxpayer Advocate believes that it is in the best interests of taxpayers and tax administration for this unspoken agreement to be articulated in a formal Taxpayer Bill of Rights. Although Congress, in three major pieces of legislation, has expressly identified numerous rights that are crafted to ensure a fair and just tax system and protect all taxpayers from potential IRS abuse, there is no single document that sets forth these rights in simple, clear language.
In 2015, Congress codified the TBOR. The Taxpayer Bill of Rights recognizes the following ten rights:
- 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. For example, if you receive a notice fully or partially disallowing your refund claim, including a refund you claim on your income tax return, it must explain the specific reasons why the claim is being disallowed. IRC § 6402(l).
- 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. For example, if the IRS is proposing to adjust the amount of tax you owe, you will typically be sent a statutory notice of deficiency, which informs you of the proposed change. This notice provides you with a right to challenge the proposed adjustment in Tax Court without first paying the proposed adjustment. To exercise this right, you must file a petition with the Tax Court within 90 days of the date of the notice being sent (or 150 days if the taxpayer's address on the notice is outside the United States or if the taxpayer is out of the country at the time the notice is mailed). Thus, the statutory notice of deficiency is your ticket to Tax Court. IRC §§ 6212; 6213(b). And if you have a legitimate doubt that you owe part or all of the tax debt, you can submit a settlement offer, called an Offer in Compromise - Doubt as to Liability offer on Form 656-L. IRC § 7122
- 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. For example, if you submit documentation or raise objections during an examination, and the IRS does not agree with your position, it will issue a statutory notice of deficiency explaining why it is increasing your tax, which gives you the right to petition the U.S. Tax Court prior to paying the tax. IRC § 6212
- 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. For example, the IRS must ensure an independent IRS Office of Appeals that is separate from the IRS Office that initially reviewed your case. Generally, Appeals cannot discuss a case with the IRS unless you or your representative is given the opportunity to be present. RRA 98 § 1001(a)(4). And if you do not agree with the proposed adjustment as a result of an examination (audit), you have the right to an administrative appeal. Statement of Procedural Rules, 26 C.F.R. § 601.103(b)
- 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. For example, the IRS generally has a statute of limitations from the date your return was filed to assess additional tax. There are some limited exceptions, such as not filing a return or filing a fraudulent return.
- 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. For example, in general, the IRS may not disclose your tax information to third parties unless you give it permission. IRC § 6103
- 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. For example, in most situations the IRS must suspend an interview if you request to consult with a representative, such as an attorney, CPA, or enrolled agent. IRC § 7521(b)(2)
- 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. For example, you may request that any amount owed be eliminated if it exceeds the correct amount due under the law, if the IRS has assessed it after the period allowed by law, or if the assessment was done in error or violation of the law. IRC § 6404(a)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
