What is the Taxpayer Bill of Rights (and How Does It Affect You)?

The Taxpayer Bill of Rights provides representation to taxpayers – here is how it affects you.

The Taxpayer Bill of Rights is a recurring subject throughout American history, and most recently refers to the ten points outlined in a 2014 charter adopted by the IRS and proposed by former National Taxpayer Advocate Nina Olson.

This charter is the first time the IRS has itself addressed the issue and formally took measures to define certain taxpayer rights. The charter remains separate from the Taxpayer Bill of Rights introduced into Congress in 1988 (which constitutes an amendment to the Internal Revenue Code of 1986), and amended twice since, and separate yet from any state-specific Taxpayer Bills of Rights, of which only Colorado continues to have one.

Understanding the differences between these local, state, and federal laws and charters can be confusing and difficult. The most relevant is the charter implemented by the IRS itself, which aims to assure taxpayers that they have the right to a fair and just tax system, and the right to challenge the IRS’s position.

While taxes have been a constant throughout US history, they have never been very consistent – tax laws are amended and changed frequently, and the US tax system has seen several drastic overhauls in its 244-year history. When planning to navigate your rights as a taxpayer in your state and county, it’s a good idea to get in touch with a professional.

The Origins of the Taxpayer Bill of Rights

The Taxpayer Bill of Rights (TABOR) is a charter, an existing amendment to tax law, and the name for various initiatives launched by conservative and libertarian tax activists seeking to limit government power.

These initiatives can be traced to the 1980s, and the age of Reaganomics, with the main goal of proposing changes to existing tax laws on the state and/or federal level that would adjust tax rates to match inflation and population growth. On a state-level, such measures were only passed via referendum in Colorado, in 1992.

The TABOR embraced by Congress in 1988 and amended later refers to changes made explicitly to define and increase taxpayer rights when faced with liens, audits, and assessments. These changes require the IRS to prove its case against the taxpayer, for example, refund tax attorney’s fees under certain circumstances, and give taxpayers more time to cover late payments before incurring interest.

In 2014, the IRS began adopting a ten-point charter considered to be a reaffirmation of existing rights already written into the Internal Revenue Code. These act more as a show of commitment by the IRS to the people, or more clearly, serve to help taxpayers understand their existing rights when confronted with a payment demand, an audit, an assessment, or any other action by the IRS.


The IRS’s Taxpayer Bill of Rights 

The IRS’s charter is the work of the Taxpayer Advocate Service, an independent organization within the IRS meant to provide representation to taxpayers and headed by the National Taxpayer Advocate. The Taxpayer Bill of Rights names ten “fundamental rights”, including:


1. The Right to Be Informed

The IRS must provide clear explanations of the law and be transparent in how it conducts its business as the nation’s federal revenue service. This means providing easy access to every bit of information the public needs to be aware of through its publications, as well as individual notices and correspondence with taxpayers. Part of that right includes having ample time to receive and respond to these notices.


2. The Right to Quality Service

Quality service may sound ambiguous, but specifically refers to a commitment towards “prompt, courteous, and professional assistance”. Some examples of this include only contacting taxpayers between the hours of 8 a.m. and 9 p.m., as well as having IRS employees provide their name and ID when communicating with a taxpayer over the phone or in an interview. This includes trying to improve customer service if it becomes inadequate and offering a way for taxpayers to file complaints.


3. The Right to Pay No More than the Correct Amount of Tax

Taxpayers have a right to receive ample notice of any deficiency or adjustment on their tax account, propose a variety of payment plans to cover their liability, file for a tax refund if they have overpaid, and seek a number of other measures to argue their liability or seek help in paying it. Taxpayers also have the right to demand that an assessment be changed if it goes against tax law or was made in error.


4. The Right to Challenge the IRS’s Position and Be Heard

The Taxpayer Bill of Rights states that taxpayers can object to any formal action the IRS takes, and expect the IRS to respond in a timely manner. Taxpayers can challenge the IRS on their position and, if they have the evidence and documentation to prove it, argue against the IRS’s actions.


5. The Right to Appeal an IRS Decision in an Independent Forum

Coinciding with the previous right, taxpayers have the right to file an appeal, and argue their case in multiple forums, ranging from the IRS’s Independent Office of Appeals, to the US tax court.


6. The Right to Finality

The right to finality describes the right to knowing when any given deadline is in regards to a taxpayer’s tax payments, tax obligations, tax returns, tax audits, and so on. Taxpayers have the right to know when they are expected to provide any given information or payment and have the right to know the statutes of limitation on tax debts and audits.


7. The Right to Privacy

Taxpayers have the right to expect that the IRS will be “no more intrusive than necessary”. More concretely, this means that there are limits to the IRS’s collection powers, specifically insofar that they may cause personal hardship, or go beyond what can be considered reasonable collection.


8. The Right to Confidentiality

Taxpayers have the right to privacy with regards to the information the IRS collects, and can expect the IRS to act against employees and others who illegally disclose taxpayer information.


9. The Right to Retain Representation 

Taxpayers can hire any authorized representative they want and have the right to request competent representation from a Low Income Taxpayer Clinic if they qualify.


10. The Right to a Fair and Just Tax System 

Finally, the last fundamental right of a taxpayer is the right to a “fair and just tax system”, insofar that any given taxpayer can expect the US tax system to “consider the facts and circumstances”, and take into account individual factors that might affect a taxpayer’s ability to respond to notices, receive notices, and make payments.


Find Yourself Quality Representation 

When seeking to navigate the confusing provisions and rules of US tax law, it’s always best to side with a reliable and experienced tax professional.

Knowing your basic Taxpayer Bill of Rights and having quality representation when facing the IRS are two separate issues, and it’s best to be well-prepared on both fronts. Rush Tax can help you remove all ambiguity in tax-related matters and represent you and your interests as a taxpayer.