The Bill of Rights |

Most of you know that I am (among many other professions and trainings) an Enrolled Agent. That means that I have passed muster with the IRS (after a multi-day exam and copious CEU’s to stay current) to handle taxes and finances for any entity subject to the IRS rules and regulations. As such, I interface with the various offices of the IRS at least once a week – and often more than once a day.

This past weekend, one of my clients was at a social event I attended. He recounted to my host (JL) that he knew he was in good hands (but, not at first), when he received this notice from the IRS that basically told him his business model was illegitimate. When he faxed me the form, I had immediately called him and told him (this is his quote of my words), “Don’t worry. This is normal for the IRS- the Salt Lake City office never seems to communicate with the rest of the IRS.”

Of course, that panicked him- that I was so glib in my response – and did not worry about his livelihood, his baby, being tanked. But, as he continued his recounting to JL, he was amazed that within a week, he did receive a letter from the IRS saying, in essence, “my bad”.

There are lots of those letters. Such as the one another client received, having waited for a response from the IRS for 19+ months, to receive a notice demanding a response to their request within ten (10) days- which necessitated a 22 page (single-spaced) letter. Amazing how they can take all the time in the world, but want your response immediately.

(I have often been tempted to respond to the IRS with the following- where IRS replaced Taxpayer… a response taxpayers receive all too often. “Dear IRS: We are attempting to respond to your inquiry. Unfortunately, this response is taking longer than we had anticipated. We will get back to you in 30 days with an update…” That letter is received by many of my clients for months on end.)

So, I was surprised (until I read the fine print) that the IRS has now published a “Taxpayer Bill of Rights”. A document that will be sent to taxpayers when they receive a communication {read audit, lien, etc.) from the IRS.

I will now provide their document- of course, laden with my editorial comments.

1. The Right to Be Informed:
This rule means that the IRS will make sure that taxpayers know the laws of the land- how to comply with tax regulations. They do aver that the instructions will be in plain English- but given all the loopholes that Congress continually adds to our tax code, that may be more than an arduous tax.
Oh, and they do promise to tell you what they have decided to do about your tax accounts.
2. The Right to Quality Service:
This is one that I have yet to see. The IRS claims it will provide prompt, courteous, and professional responses. The last- absolutely. The second- more often than not. The first- only if 90 minutes on hold is prompt. Continual 30 day notices (as discussed above) is another. Maybe this will mean these problems will disappear. I certainly hope so- because I hate having to bill my clients for time waiting to reach a human.
3. The Right to Pay No More than the Correct Amount of Tax:
Well, this has always been true. But, honestly, unless you hire someone like us, you are not going to be able to pay the lowest amount of taxes required by law. Because the tax code is complex. And the rules are abstruse. So, unless you never itemize, never declare a deduction, the “correct amount of tax” is a variable that is too variable.
4. The Right to Challenge the IRS’s Position and Be Heard:
In more than 95% of the cases I have with the IRS, this has been the case. Taxpayers’ objections, additional documentation, and lengthy discussions are the norm. It is only in the rare occasion (we all have bad employees) that this has not been the case.
Just so you know, there are special forms one can use to arouse attention higher up that work. Maybe not quickly- in that a response is provided. But, they do immediately stop all collection and levy actions. As long as the required form are filed in a timely fashion.
5. The Right to Appeal an IRS Decision in an Independent Forum:
This rule depends upon whether you think the Office of Appeals or Tax Court is an independent forum. Oh, you can, on rare occasions and, at great personal expense, find a real (read state or federal) court that will hear your case. But, mostly you must rely on yet another IRS employee to make a decision. And, at least, from my history, that is not all bad. With perhaps only one exception in all these years, a true and fair hearing has occurred- and we can explain the results simply and easily to our clients.
6. The Right to Finality:
This means (according to the IRS) that a taxpayer knows how long they can wait to challenge an IRS positon and the most time it can take the IRS to audit a tax year or collect a debt. Except for how long audits can or cannot take, this has been the norm with the IRS. Maybe now there will be a finite audit period. But, I generally see that the excuse of the auditor is generally taken- and the taxpayer must live with it.
7. The Right to Privacy:
The IRS avers that they will comply with the law and not be overly intrusive. Oh, and when and if they decide to levy, they will provide you due process. That typically means you get the notice of levy the same time the financial institution does- which means there is a hold on your account. But, they will notify you.
To be honest, you should know by then that the IRS is on the “warpath”. Because they have asked (their terminology, not mine) you respond to their requests. So, it’s really never a total surprise.
8. The Right to Confidentiality:
This means that if your advisor does not have a Power of Attorney (IRS Form 2848), he/she will not be informed and cannot act on your behalf. That’s been the practice for decades. And, that taxpayers can expect the IRS to go after their own who divulge information- or steal your identity. (Consider the case against Demetria Brown, an IRS employee who was involved in stealing identities of many taxpayers.)
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 seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation. True enough- but, like is true with some public defenders, some many not be adequate.
10. The Right to a Fair and Just Tax System:
Well, this is a great idea. Maybe we can have our legislators study this concept- so they would legislate a fair and just system. The only thing the IRS can do is treat us all fairly and justly under the system as it is imposed on the US citizens. But, the IRS will consider one’s ability to pay – and has been doing so for some time now. I am less sanguine about their conceptual understanding of how much time it takes certain taxpayers to respond- but I do understand that deadlines are critical for both parties.