Whether you currently owe taxes or expect to owe taxes in the future, you should know that you have guaranteed rights as a taxpayer when the Internal Revenue Service (IRS) begins the collection process against you. The Taxpayer’s Bill of Rights is specified in IRS Publication 1 “Your Rights as a Taxpayer,” and there are ten (10) in total:
- Quality Service,
- Pay No More Than You Owe,
- Challenge the IRS’ Position,
- Appeal an IRS Decision in an Independent Forum,
- Representation, and
- Fair and Just Tax System.
You can read a summary of these rights from the IRS website here. For the sake of brevity, here are a few important highlights:
When the IRS collection begins, the most important right that you have is the right to representation. Depending on where you are in the collection process, the IRS will allow you time to seek representation. If you are equipped with the knowledge necessary to resolve your case, then you may not need to hire a representative. However, you do not have to answer to the IRS alone, afraid, and unequipped. Representation is generally achieved by filing Form 2848. An authorized representative should be knowledgeable of IRS procedures and work with you throughout your case to achieve your desired results. Because authorized representatives are not all equally effective, we recommend that you determine the depth of knowledge of your representative before engaging them to represent you.
Another important right is to pay no more than the correct amount of taxes. This part can become very complex as tax law is complex in itself. If you just owe taxes because you did not withhold enough for the prior tax year, then you may be able to resolve your balance easily and without additional help. However, if you do not know why you owe or disagree with the amount that you owe, then it may benefit you to investigate the issue further and/or request additional help from a qualified professional. Complex issues can arise in the investigation and can include IRS system errors, misreported income, innocent spouses issues, etc. Digging into these issues may take more time than you can afford, and it may require intricate knowledge of tax laws. For a more vivid example, consider the hypothetical below:
You received a notice from the IRS for a prior tax year that shows you owe $10,000. You had filed Married Filing Separately (MFS) for that year. You have since been divorced. You tried calling the general IRS line and waited hours to speak with an agent. You spent hours more calling the IRS and finally reached an agent. The agent explained to you that the taxes are from your ex-spouse. How could that be? If you know anything about taxes, it is that you should not be liable for your ex-spouse’s taxes when filing MFS. If all of the stars align, the agent would have recognized your issue and began a correction process. The correction process could take months before it is resolved. If an agent did not help, you may have to exercise your other rights, including a formal challenge and potentially an appeal. This could take a tremendous amount of time and expertise to resolve.
As illustrated, you have certain rights that you may exercise. Knowing when to exercise them is crucial to resolving your tax issue. If you have tax issues, we recommend that you research as much as possible and hire additional help via qualified representatives if needed. Always make sure that you review your tax returns before filing them or request the assistance of a trusted advisor.