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Taxpayer Bill of Rights (Part XI)

Taxpayer Bill of Rights (Part XI): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #7: The Right to Privacy (cont.)

What This Means for You

* There are limits on the amount of wages that the IRS can levy (seize) in order to collect tax that you owe. A portion of wages equivalent to the standard deduction combined with any deductions for personal exemptions is protected from levy. IRC § 6334(d)

* The IRS cannot seize your personal residence, including a residence used as a principal residence by your spouse, former spouse, or minor child, without first getting court approval, and it must show there is no reasonable alternative for collecting the tax debt from you. IRC § 6334(e) Treas. Reg. § 301.6334-1(d)(1)

The revenue officer must attempt to personally contact you and if you indicate the seizure would cause a hardship, he or she must assist you in contacting the Taxpayer Advocate Service if not providing the requested relief. IRM 5.10.1.7.2

The IRS issued interim guidance that extends these protections to suits to foreclose a lien on a principal residence. According to this guidance, the IRS should not pursue a suit to foreclose a lien on your principal residence unless it has considered hardship issues and there are no reasonable administrative remedies. See IRS Interim Guidance Memo SBSE-05-0414-0032.

* As soon as practicable after seizure, the IRS must provide written notice to the owner of the property that the property will be put up for sale. Before the sale of the property, the IRS shall determine a minimum bid price. Before the property is sold, if the owner of the property pays the amount of the tax liability plus the expenses associated with the seizure, the IRS will return the property to the owner. Within 180 days after the sale, any person having an interest in the property may redeem the property sold by paying the amount the purchaser paid plus interest. IRC §§ 6335, 6337

More information next week on Right 7 (IRS NTA web site) (TTT 7/10/18)

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What is the Taxpayer Advocate Service?

What is the Taxpayer Advocate Service?

The Taxpayer Advocate Service (TAS) is your voice at the IRS. An independent organization within the IRS,TAS is here to ensure that every taxpayer is treated fairly and that you know and understand your rights. TAS can offer you free help if you have a tax problem that you haven’t been able to resolve with the IRS. If you qualify, you’ll be assigned to one advocate who will do everything possible to resolve your problem.

For more information, including how to contact us, visit taxpayeradvocate.irs.gov or call 1-877-777-4778.

(IRS Pub 5170) (TTT 07/03/2018)

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Taxpayer Bill of Rights (Part X)

Taxpayer Bill of Rights (Part X): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #7: 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 a collection due process hearing where applicable.

What This Means for You

  • During a Collection Due Process hearing, an independent IRS Appeals/Settlement Officer must consider whether the IRS’s lien filing balances the government’s need for the efficient collection of taxes with your legitimate concern that the IRS’s collection actions are no more intrusive than necessary. IRC § 6320
  • During a Collection Due Process hearing, an independent IRS Appeals/Settlement Officer must consider whether the IRS’s proposed levy action balances the government’s need for the efficient collection of taxes with your legitimate concern that the IRS’s collection actions are no more intrusive than necessary. IRC § 6330
  • The IRS cannot levy any of your personal property in the following situations: before it sends you a notice of demand, while you have a request for a payment plan pending, and if the IRS will not recover any money from seizing and selling your property. IRC § 6331
  • The IRS cannot seize certain personal items, such as necessary schoolbooks, clothing, undelivered mail, certain amounts of furniture and household items, and tools of a trade. IRC § 6334(a)

More information next week on Right 7 (IRS NTA web site) (TTT 6/26/18)

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Taxpayer Bill of Rights (Part IX)

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #6: The Right to Finality (cont.)

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. Taxpayers have the right to know when the IRS has finished an audit.

What This Means for You

  • The IRS generally has three years from the date your return was filed to assess the tax. There are some limited exceptions to the 3-year rule, such as not filing a return or filing a fraudulent return. IRC § 6501
  • I The IRS generally has ten years from the assessment date to collect unpaid taxes from you. However, there are a number of circumstances where the ten year collection period may be suspended, such as during the period when the IRS cannot collect, e.g., bankruptcy or a collection due process proceeding, or an offer in compromise is pending. IRC § 6502
  • If you believe you have overpaid your taxes, you can file a refund claim asking for the money back. Generally, you must file a refund claim within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. IRC § 6511
    See also IRC § 6402:  Administrative claim for refund under the Right to Pay No More than the correct amount of tax.
  • If you or the IRS does not file a timely appeal, the decision of the U.S. Tax Court is final. IRC § 7481
  • Generally, you will only be subject to one examination per taxable year. However, the IRS may reopen a taxable year that has been previously examined if the IRS finds it necessary (e.g., there is evidence of fraud). IRC § 7605(b)

(IRS NTA web site) (TTT 6/19/18)

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Taxpayer Bill of Rights (Part VIII)

Bill of Right #6: 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. Taxpayers have the right to know when the IRS has finished an audit.

What This Means for You

  • In order to timely challenge a statutory notice of deficiency in Tax Court, you must file your petition within 90 days of the date of the statutory notice of deficiency 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. If you do not timely file a petition, the amount proposed in the statutory notice will be assessed and you will receive a bill. IRC § 6213

For more information about filing a petition, see the United States Tax Court’s taxpayer information page.

  • If you receive a notice proposing additional tax (statutory notice of deficiency), the notice must include the deadline for filing a petition with the Tax Court to challenge the amount proposed. IRC § 6213(a) (TTT 6/12/18)
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Taxpayer Bill of Rights (Part VII)

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Rights #5: The Right to Appeal an IRS Decision in an Independent Forum (cont.)

  • You can generally request that an issue you have not been able to resolve with the IRS examination or collection division be transferred to the Office of Appeals. For issues that are unresolved after working with Appeals, you may request non-binding mediation (where a neutral third party will help you try to reach a settlement) or binding arbitration (where you and the IRS will be bound by a third party’s decision). You may also request non-binding mediation or arbitration after unsuccessfully trying to enter into a closing agreement or offer in compromise. IRC § 7123
  • Generally, if you have fully paid the tax and your tax refund claim is denied or if no action is taken on the claim within six months, then you may file a refund suit in a United States District Court or the United States Court of Federal Claims. IRC § 7422
  • In very limited circumstances, you can ask a court to make a determination on certain tax issues prior to there being an actual dispute between you and the IRS. For example, a court may be able to determine whether an organization is tax-exempt or if a retirement plan is valid. IRC §§ 7428, 7476-7479
  • A jeopardy levy or assessment allows the IRS, in very limited circumstances, to bypass normal administrative safeguards and protections. For example, the IRS may issue a jeopardy levy if the IRS has knowledge that the taxpayer is fleeing the country. If the IRS makes such a jeopardy levy or assessment, you have the right to file a law suit and the court will determine whether the levy or assessment was reasonable under the circumstances and whether the amount is appropriate. IRC § 7429

(IRS NTA web site) (TTT 6/5/18)

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Taxpayer Bill of Rights (Part VI)

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Rights #5: The Right to Appeal an IRS Decision in an Independent Forum (cont.)

  • To exercise your right to challenge the proposed adjustment in Tax Court without first paying the proposed adjustment, 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). IRC § 6213

For more information about the United States Tax Court, see the Court’s taxpayer information page.

  • In certain circumstances, the Office of Appeals has exclusive authority to settle your case. Generally, for the four months after you petition Tax Court, Appeals will be the only office within the IRS who can settle your case as long as the statutory notice of deficiency or other notice of determination was not issued by Appeals. Statement of Procedural Rules, 26 C.F.R. § 601.106

For more information about the United States Tax Court, see the Court’s taxpayer information page.

  • If the IRS rejects your request for an offer in compromise asking the IRS to settle your tax debt for less than the amount owed, or a payment plan, called an installment agreement, then you may seek an independent review of the rejection with the IRS Office of Appeals. IRC § 6159(f) / IRC § 7122(e).

More information next week on Right #5 (IRS NTA web site) (TTT 5/29/18)