Know Your Taxpayer Bill of Rights When Dealing with the IRS – Part 2

Know Your Taxpayer Bill of Rights When Dealing with the IRS – Part 2

The focus of my practice is in working with taxpayers to give them an avenue that leads to a resolution for a tax problem that is causing undue stress. We can provide assistance when faced with an audit/examination for both, personal and business matter, and provide expertise when finding yourself in collections for delinquent tax debt..

We continue looking at the Taxpayer Bill of Rights that was implemented by the IRS in 2014. We covered five rights in the previous post, and this post will cover the last five rights the taxpayer has when dealing with the IRS. This is an overview.

Taxpayer Bill of Rights

Right to Finality – The taxpayer has the right to know exactly how much time they have to dispute the position or assessment of the IRS, and the amount of time the IRS has to either audit a specific tax year or collect a tax liability. The IRS must inform the taxpayer when an audit has been completed.

  • In general, the IRS has three years from the date your return is filed to assess any additional taxes that may be owed for that year. This time limit does not apply when the taxpayer fails to file a return, files a false or fraudulent return. Under these circumstances the IRS has unlimited to assess the tax for that year.
  • In general, the IRS has ten years from when the tax is assessed to collect the unpaid taxes. The IRS cannot extend this period unless the taxpayer is entering into an installment agreement to pay off liability or the IRS has received a court judgment. But, there are circumstances where the ten year collection period can be suspended and picked up where it left off. An example would be when there is a bankruptcy filed or a collection due process proceeding.
  • It is available to file for a refund if the taxpayer feels that they overpaid on taxes. This should be done within a three year period of either, from the date the original return was filed, or two years from the date the tax was paid, whichever is later.
  • Any notice received from the IRS requesting an additional tax due must include the date by which the taxpayer has in order to file a petition to challenge the notice.
  • Generally, the taxpayer is only subject to one audit/examination per tax year, but exams from previous years may be reopened if the IRS deems necessary.

Right to Privacy – Taxpayers can expect that any inquiry, examination or enforcement action on the part of the IRS will comply with law and be no more intrusive than warranted. All due process rights will be adhered to.

  • The IRS is limited to how much wages can be levied. The amount of standard deductions and personal exemptions are protected from levy.
  • Some personal items cannot be seized, such as school books, clothing, and certain amount of furniture and household items. A taxpayer’s personal residence cannot be seized without court approval, and it must show that there is no other reasonable alternative for collecting the debt.
  • Without any reasonable indication that the taxpayer has unreported income, the IRS is not allowed to seek intrusive lifestyle information.
  • If taxpayer makes an offer to pay only what is owed in a doubt as to liability offer in compromise, full financial disclosure need not be made.

Right to Confidentiality – Information that is provided to the IRS by the taxpayer is expected to kept undisclosed to other parties unless authorized by the taxpayer or required by law. Taxpayers have the right to see that anyone found wrongfully disclosing their information has appropriate actions taken against them.

  • Without taxpayer consent the IRS has no right to disclose tax information to third parties.
  • Third parties such as employers, neighbors, or financial institutes are not to be contacted by the IRS in an effort obtain information about adjusting or collecting the taxpayer liability without a notice in advance.
  • Taxpayers can expect from federally authorized practitioners such as enrolled agents, the same confidentiality of that of an attorney-client relation. These confidential communications include:

Advise on tax matters that fall within the scope of the tax practitioner’s authority to practice before the IRS – Would confidential between and attorney and clients – Related to noncriminal tax matters before the IRS – or relate to noncriminal tax proceedings brought in federal court by or against the United States.

Right to Retain Representation –

Taxpayers have the right to retain authorized representative of their choice to represent them before all levels of the IRS in resolving whatever tax issue they have.  If the taxpayer cannot afford a representative due to low income, they have the right to seek assistance from a Low Income Clinic.

  • ​The taxpayer can select an authorized representative such as an attorney, certified public accountant, or an enrolled agent to represent and stand in for you at any interview with the IRS, unless the taxpayer received a formal summons to appear before the IRS.
  • The taxpayer has the right to consult with a representative, and the IRS in most situations is required to suspend an interview.
  • Anyone permitted to represent the taxpayer, and has not been disbarred or suspended from practice before the IRS, may submit a written power of attorney to represent a taxpayer before the IRS.
  • With low income taxpayers, they have the right to ask a Low Income Taxpayer Clinic for representation for no or minimal cost.

The Right to a Fair and Just Tax System – ​The taxpayer has the right to expect a just tax system that takes into consideration both fact and circumstances that could have an affect on the tax liabilities at hand, the ability to pay the liabilities, or provide information in a timely manner. When face with financial difficulties or the IRS is not providing proper or timely resolve to the tax issues through the normal channels used in dealing with the IRS.

  • ​If the taxpayer cannot pay debt in full, and certain conditions are met, the taxpayer has the right to enter into a payment plan.
  • An offer in compromise may be submitted to pay less than full payment if you believe that you do not owe the amount assessed, if you are unable to pay the amount in the time allotted, or if paying the full amount would result in financial hardship.
  • National and local cost of living expense guidelines are not to be used if the result of using the guidelines causes the inability to pay basic living expenses.  Actual expenses will be used instead.
  • The IRS is not allowed to seize all wages in order to collect unpaid taxes. There must be a portion allowed to support living expenses.
  • The IRS may abate a portion of tax debts that is excessive in amount, assessed after the statutory period of limitations has expired, or is erroneously or illegally assessed.
  • If an IRS employee caused an unreasonable delay or error resulting in the underpayment of taxes owed by the taxpayer, the IRS may abate the interest penalty.

If you have any questions regarding the Taxpayer Bill of Rights in San Jose, CA feel free to contact me at (408) 684-8505 or email me at