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Taxpayer Bill of Rights (Part XVIII)

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

Bill of Right #10: The Right to a Fair and Just Tax System (cont.)

* You may request that the IRS remove any interest from your account that was caused by the IRS’s unreasonable errors or delays. For example, if the IRS delays issuing a statutory notice of deficiency because the assigned employee was away for several months attending training, and interest accrues during this time, the IRS may abate the interest as a result of the delay. IRC § 6404(e)

* The time limit for asking for the taxes you paid to be refunded may be suspended during the time you are unable to manage your financial affairs due to a mental or physical health problem. IRC § 6511(h)

* If you have acted with reasonable care you may be entitled to relief from certain penalties. Additionally, if you have a reasonable basis for taking a particular tax position, such as a position on your return or a claim for refund, you may be entitled to relief from certain penalties. Reliance on the advice of a tax professional can in certain circumstances represent reasonable cause for the abatement of certain penalties. IRC §§ 6651, 6656, 6694, 6662, 6676

* If you use a return preparer who takes an unreasonable or reckless position that results in underreporting your tax, that preparer may be subject to penalties. IRC § 6694

(IRS NTA web site) (TTT 8/28/18)

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Taxpayer Bill of Rights (Part XVII)

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

Bill of Right #10: 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.

What This Means for You

* If you cannot pay your tax debt in full and you meet certain conditions, you can enter into a payment plan with the IRS where you pay a set amount over time, generally on a monthly basis. IRC § 6159 See TAS Toolkit, Installment Agreements.

* 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) See also IRC § 6502: Limitations on collection after assessment (statute of limitations) under the Right to Finality

Next week more information on Right 10 (IRS NTA web site) (TTT 8/21/18)

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Taxpayer Bill of Rights (Part XVI)

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

Bill of Right #9: 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 be told that if they cannot afford to hire a representative they may be eligible for assistance from a Low Income Taxpayer Clinic.

What This Means for You

* If you have won your case in court, under certain conditions, you may be entitled to recover certain reasonable administrative and litigation costs related to your dispute with the IRS. IRC § 7430

* 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)

* You may select a person, such as an attorney, CPA, or enrolled agent to represent you in an interview with the IRS. The IRS cannot require that you attend with your representative, unless it formally summons you to appear. IRC § 7521(c)

* If you are an individual taxpayer eligible for Low Income Taxpayer Clinic (LITC) assistance (generally your income must be at or below 250 percent of the federal poverty level), you may ask an LITC to represent you (for free or a minimal fee) in your tax dispute before the IRS or federal court. IRC § 7526 For more information, see Publication 4134, Low Income Taxpayer Clinic List.

Next week information on Right 10 (IRS NTA web site) (TTT 8/14/18)

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Taxpayer Bill of Rights (Part XV)

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

Bill of Right #8: The Right to Confidentiality (cont.)

What This Means for You

* In general, the IRS cannot contact third parties, e.g., your employer, neighbors, or bank, to obtain information about adjusting or collecting your tax liability unless it provides you with reasonable notice in advance. Subject to some exceptions, the IRS is required to periodically provide you a list of the third party contacts and upon request. IRC § 7602(c)

* The National Taxpayer Advocate and Local Taxpayer Advocates may decide whether to share with the IRS any information you (or your representative) provide them regarding your tax matter, including the fact that you’ve contacted the Taxpayer Advocate Service. IRC § 7803(c)(4)(A)(iv)

(IRS NTA web site) (TTT 8/07/18)

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Taxpayer Bill of Rights (Part XIV)

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

Bill of Right #8: The Right to Confidentiality (cont.)

What This Means for You

* Communications between you and an attorney with respect to legal advice the attorney gives you are generally privileged. A similar privilege applies to tax advice you receive from an individual who is authorized to practice before the IRS (e.g., certified public accountant, enrolled agent, and enrolled actuary), but only to the extent that the communication between you and that individual would be privileged if it had been between you and an attorney. For example, communication between you and an individual authorized to practice before the IRS regarding the preparation of a tax return is not privileged because there would be no similar privilege between a taxpayer and an attorney. The privilege relating to taxpayer communications with an individual authorized to practice before the IRS only applies in the context of noncriminal tax matters before the IRS, and noncriminal tax proceedings in Federal court where the United States is a party. IRC § 7525

More information next week on Right 8 (IRS NTA web site) (TTT 7/31/18)

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Taxpayer Bill of Rights (Part XIII)

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

Bill of Right #8: 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 the IRS to investigate and take appropriate action against its employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

What This Means for You

* In general, the IRS may not disclose your tax information to third parties unless you give it permission, e.g., you request that we disclose information in connection with a mortgage or student loan application. IRC § 6103

* If a tax return preparer discloses or uses your tax information for any purpose other than for tax preparation, the preparer may be subject to civil penalties. If the disclosure or improper use is done knowingly or recklessly, the preparer may also be subject to criminal fines and imprisonment. IRC §§ 6713, 7216

More information next week on Right 8 (IRS NTA web site) (TTT 07/24/18)

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Taxpayer Bill of Rights (Part XII)

Taxpayer Bill of Rights (Part XII): 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

* If the IRS sells your property, you will receive a breakdown of how the money received from the sale of your property was applied to your tax debt. IRC § 6340

* Under § 3421 of the Restructuring and Reform Act of1998 IRS employees are required “where appropriate,” to seek approval by a supervisor prior to filing a Notice of Federal Tax Lien. Section 3421 further requires that disciplinary actions be taken when such approval is not obtained. RRA § 98 3421

* The IRS should not seek intrusive and extraneous information about your lifestyle during an audit if there is no reasonable indication that you have unreported income. IRC § 7602(e)

* If you submit an offer to settle your tax debt, and the offer relates only to how much you owe (known as a Doubt as to Liability Offer in Compromise), you do not need to submit any financial documentation. IRC § 7122(d)(3)(B) For information, see Form 656-L, Offer in Compromise (Doubt as to Liability).

(IRS NTA web site) (TTT 07/17/18)

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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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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)