Understanding a Taxpayer’s Rights During an IRS Audit

Taxpayers’ Rights

Taxpayer’s rights must be upheld at all cost even to an IRS investigation. Many taxpayers justifiably fear an IRS audit and its potential financial consequences. However, because they have only heard of audits described as something they should fear, many taxpayers have only a partial understanding of the process. In the minds of many, it is particularly easy and perhaps human nature to picture the IRS and its audit process as arduous, difficult, and confusing.

However, the audit process is governed by numerous sources of authority including IRS rules, policy manuals, and the U.S. Tax Code.  Under these authorities, taxpayers are granted certain rights while the IRS and its investigators and auditors are assigned certain responsibilities and duties. Individuals who understand their rights as taxpayers are better able to protect and use these rights.

Taxpayers’ Rights During an IRS Audit

Taxpayers’ rights are set forth in Section 7803 of U.S. Tax Code and are described in the more accessible language in IRS Publication 1, Your Rights as a Taxpayer.  Generally, the IRS segments the rights that are codified in §7803 as ten distinct rights. These rights are:

  1. The taxpayer’s right to be informed – All taxpayers are entitled to the right to know what they must do to comply with the tax laws of the United States. Taxpayers must receive clear explanations and to be informed of IRS decisions regarding their matter.
  2. The taxpayer’s right to receive quality service – A taxpayer has a right to prompt, courteous, and professional assistance. Taxpayer also has the right to speak to an IRS supervisor to discuss and resolve inadequate service.
  3. The taxpayer’s right to pay the correct amount of tax legally due – While taxpayers must pay all taxes that they are legally obligated to pay, they are not obligated to pay more than they are legally required. This concept applies to the principle, penalties, and interest.
  4. The taxpayer’s right to challenge the IRS’s determination – A taxpayer is free to and entitled to challenge IRS determinations. The taxpayer may submit additional evidence in response to IRS decisions or proposed actions.
  5. The right to bring a tax appeal in an independent forum – The taxpayer is also entitled to file a tax appeal in in an independent forum where an impartial decision can be rendered. Appeals may include the IRS’s administrative appeals programs or appeal to the federal courts.
  6. The right to receive a final decision on the matter – A taxpayer is also entitled to finality. He or she is entitled to know the maximum amount of time he or she can challenge IRS decisions and the maximum amount of time he or she can be held accountable for an audit.
  7. The right to privacy – Taxpayers are also entitled to an investigation or audit that is no more expansive or intrusive than necessary.
  8. The right to confidentiality – The taxpayer has a right to expect that information disclosed to the IRS is not subsequently disclosed unless disclosure is authorized or
  9. The right to hire a tax attorney or representation – Taxpayers have a right to hire representation for their tax matters. Since the U.S. Tax Code is complex and voluminous, hiring a tax lawyer is frequently essential to a strategic handling of the issue.
  10. The right to a fair and just tax system – Taxpayers have the right to an equitable tax system that considers facts and circumstances that might affect underlying liabilities, ability to pay, or ability to provide information in a timely manner.

The above describes the general outlines of the rights taxpayers have in any IRS audit or another proceeding. Taxpayers who are aware of their appeal and challenge rights can frequently experience superior outcomes compared to taxpayers who do not understand these rights. Working with a lawyer who understands how to protect these rights is essential.

Additional Taxpayers’ rights Developments Due to IRS Improper Targeting Scandal

A number of these rights and the enactment of the authorizing legislation may have stemmed from the IRS’s “unlawful targeting” scandal that has plagued the agency for a number of years. Furthermore, additional legislation including the Protecting Americans from Tax Hikes Act of 2015, PL 114-113, also implements additional restrictions on the behavior of IRS employees and agents. For example, the law prohibits IRS employees from making use of personal e-mail accounts when they are conducting official government business. Furthermore, the law states that IRS employees who take action or refrain from taking action due to political purposes or for personal gain can be held liable for these acts.

Work with Aggressive and Strategic Tax Lawyers

Taxpayers who have a lawyer willing to fight for them and protect their rights often achieve more favorable outcomes with the IRS or state taxing agency. The tax lawyers of the Tax Law Offices of David W. Klasing can work for you when you are facing an IRS audit, collection, or enforcement action. To schedule a reduced rate consultation call us at 800-681-1295 or online.