WITH the immense powers that the government wields over individuals, the founding fathers included in the United States Constitution the Bill of Rights to limit the exercise of governmental powers. These rights, which have been enshrined as the first ten amendments to the Constitution, protect individual rights to life, liberty and property.
Similarly, in the tax collection process which is tasked to be implemented by the Internal Revenue Service (IRS), taxpayers have rights too. These rights are enacted by the United States Congress in 1988 as the “Taxpayers Bill of Rights” (TBOR). Subsequently, Congress expanded these rights by legislating TBOR 2 in 1996 and TBOR 3 in 1998.
Essentially, the taxpayers are guaranteed by TBOR to:
– Privacy and confidentiality of their tax records;
– Professional and courteous service by IRS personnel;
– Representation in dealing with tax problems or issues;
– Help from the Taxpayer Advocate Service (TAS); and
– Administrative and judicial review of determinations or decisions by IRS.
In this first installment of a series of discussions on taxpayer rights, I will focus on the rights provided under the first TBOR. Internal Revenue Code (IRC) Sec. 7521 provides that every taxpayer shall have the right to an explanation on the process by which an audit of a taxpayer’s income tax return is conducted, how IRS collects taxes as a result of an audit, and how to appeal audit findings or reports. It also provides taxpayers the right to be represented during the audit process and make an audio recording, upon advance notice, of any interview by IRS personnel.
The original TBOR deals with the taxpayer’s rights during the audit process. In general, an audit is an examination by the IRS of an income tax return whenever there are discrepancies found or questionable deductions. According to the IRS, in the vast majority of audits, the key issue involved is support or justification on deductions being claimed on the tax return.
An important aspect of the taxpayer’s rights under the first TBOR is the right of representation. Despite the requirement that taxpayers be given an explanation of the whole audit process and how to appeal any audit finding, most people will still find the process confusing or difficult to understand simply because they are not familiar with it or do not have the luxury of time to study the issues involved. This is where a tax professional’s job becomes important.
The law recognizes only three types of individuals who can represent a taxpayer: attorney, accountant and enrolled agent. Having been trained on the complex and intricate laws and regulations involving taxes, these tax professionals are in the best position to help taxpayers in resolving their tax problems.
One of the most important benefits of being represented by a tax professional is that IRS personnel will stop dealing directly with a taxpayer. IRS agents should immediately stop questioning a taxpayer once the IRS agent is notified that the taxpayer is represented or wants to be represented by a tax professional. Any interview being conducted by an IRS agent will generally have to be suspended.
The bottom line is, if you have tax problems and you have to deal with the IRS, consult with a tax professional, don’t deal with the IRS on your own. I have clients who are lawyers but they do not dare represent themselves with the IRS. Remember the old adage: “He, who represents himself, is a fool for a client.”
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Edgardo M. Lopez is an attorney licensed to practice in the Internal Revenue Service and the United States Tax Court. He has been an attorney for 25 years and he is a member of the American Society of Tax Problem Solvers. His IRS practice is throughout the United States and he has offices in the entire State of California (Los Angeles, San Francisco, and San Diego). His office has an A+ rating with the Better Business Bureau. Toll Free: (855) 829 4771; (888) 970 3939, E-mail: firstname.lastname@example.org, Website: TaxReleaseInc.com