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Taxpayer Bill of Rights

The Taxpayer Bill of Rights.


On November 10, 1988, President Reagan signed into law a bill specifying the rights of all taxpayers in dealings with the Internal Revenue Service. This law specifies your rights as a taxpayer as follows:On November 10, 1988, President Reagan signed into law a bill specifying the rights of all taxpayers in dealings with the Internal Revenue Service. This law specifies your rights as a taxpayer as follows:

1. Requires that the IRS notify all taxpayers of their rights in writing whenever contact is made. To satisfy this requirement, the IRS has developed Publication 1, which you can request a copy or they send one with most communications between them and the tax payer.

2. Provides that a taxpayer can be represented by an Enrolled Agent (EA, attorney or CPA. The representative must have a proper executed power of attorney. If, during the course of an audit, the taxpayer indicates that they desire to consult with a representative, the agent must immediately suspend the audit and allow the taxpayer to obtain counsel.

3. The audit must be conducted at a reasonable place and time. A taxpayer represented through a valid power of attorney by a qualified representative need not be present at the audit unless an administrative summons is issued or the representative is responsible for unreasonable delay or hindrance.

4. If a taxpayer relies on written advice from the IRS in preparing a return that is subsequently found to be erroneous, the IRS is required to abate any portion of any penalty or addition to tax that is attributable to such advice. Relief is not available if the taxpayer failed to provide adequate or accurate information.

5. The IRS Taxpayer Advocate Office (formally known as the Problem Resolution Office), can issue a taxpayer assistance order if the taxpayer has suffered or is about to suffer a significant hardship as a result of IRS action. A taxpayer assistance order may require specific action such as releasing taxpayer property upon which a levy has been issued. It may also halt proceedings to levy bank funds.

6. IRS will generally permit a taxpayer who is unable to pay his full tax liability to make installment payments. The agreement is to remain in effect for the entire term unless:

  1.   the taxpayer fails to pay an installment when due,
  2.   the taxpayer provided inaccurate information,
  3.   the taxpayer fails to pay other tax liabilities when due,
  4.   the taxpayer fails to respond to IRS requests for updated financial information, or
  5.   the IRS determines that the collection of tax to which an agreement relates is in jeopardy. The IRS may modify or terminate an agreement if the financial condition of the taxpayer has changed significantly.

7. A taxpayer's personal residence is only subject to levy in cases of jeopardy or with
the consent of the District Director or his Assistant.

8. Banks will be required to hold levied funds, for 21 days before remitting them to the

9. The IRS must release a levy on property if:

  1. the liability for which the levy was made is satisfied,
  2. the IRS determines the release will facilitate the collection of the liability,
  3. an installment payment agreement has been executed with respect to the liability,
  4. IRS has determined that the levy is creating an economic hardship due to the taxpayer's financial condition, or
  5. the fair market value of the property exceeds the liability and partial release would not hinder collection of the tax and related costs owed to the IRS.

There has been some other changes, that strengthen's the Taxpayer Bill of Rights to the extent that the taxpayer can appeal some actions by the IRS to the US Tax Court for a hearing and final determination. These changes can be discussed with a practitioner of tax law, such as an Enrolled Agent or attorney. Some of these changes are complex and to lenghy to discuss here.

We just wanted to bring you the highlights of the Taxpayer Bill of Rights, and each taxpayer's situation is different, if you have any questions, just ask us.

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