Taxpayer Bill of Rights

1. Introduction

In response to complaints regarding IRS dealings with taxpayers, especially with respect to overzealous actions taken by IRS employees to collect allegedly delinquent tax liabilities through the power to levy on property and property rights of the taxpayer, Congress enacted the "Taxpayer Bill of Rights" as part of the Technical and Miscellaneous Revenue Act of 1988 (P.L. 100-647, "TAMRA"). Further protections were added under the Taxpayer Bill of Rights 2 (P.L. 104-168) and by the IRS Restructuring Act (P.L. 105-206).

2. Taxpayer Rights

The IRS is required to prepare a statement setting forth in simple and non-technical language the rights of a taxpayer and the obligations of the IRS during an examination, the procedure by which a taxpayer may appeal an adverse decision of the IRS (including administrative and judicial appeals), the procedures for filing refund claims and taxpayer complaints, and the procedures the IRS may use in enforcing the tax laws (including assessment, levy and enforcement of liens). The IRS has complied with Congress' mandate by issuing updated versions of Publication 1, Your Rights as a Taxpayer; Publication 5, Appeal Rights and Preparation of Protests for Unagreed Cases; Publication 556, Examination of Returns, Appeal Rights and Claims for Refund; and Publication 594, The IRS Collection Process; Publication 1660, Collection Appeal Rights.  Comment: Sections 3501, 3502, and 3503 of the IRS Restructuring Act (P.L. 105-206) required that Publication 1, Your Rights as a Taxpayer, be expanded to include a description of innocent spouse relief, notice of a taxpayer's right to a practitioner's assistance at interviews and the right to suspend interviews under Section 7521(b)(2), and a general disclosure of examination selection criteria. An updated version of Publication 1 complying with these requirements was released by the IRS on December 29, 1998 (revised August 2000). Further, Section 3504 of the IRS Restructuring Act required the IRS to provide taxpayers with an explanation of the examination, appeals and collection process with the first letter of proposed deficiency that allows the taxpayer an opportunity for administrative review at IRS Appeals.

3. Taxpayer Interviews

Section 7521(a) provides that where a taxpayer wishes to make an audio recording in connection with any in-person interview with an IRS employee, the taxpayer must be permitted to do so at his own expense if he or she furnishes the audio equipment. Ten days advance notice is required. The IRS may also record the interview with the same 10 days advance notice requirement, and, if such recording is made, must provide the taxpayer with a transcript, the cost of which must be paid by the taxpayer.

The taxpayer may be represented in any such interview by a person duly authorized to represent the taxpayer before the IRS. The taxpayer may appear accompanied by an authorized representative. The IRS can require the taxpayer to accompany the representative only where the interview is in response to an IRS administrative summons. 

Further, in connection with any taxpayer interview, an IRS employee must explain the examination and appeals processes or the collection process and the taxpayer's rights thereunder.  Finally in any interview (other than in response to a summons) the taxpayer is permitted to suspend the interview at any time for the purpose of consulting with a representative.  However, the taxpayer must not abuse this privilege. If the examiner concludes that the taxpayer is calling for suspensions for the purpose of delay, an administrative summons will usually be issued. Where a taxpayer is interviewed in response to such a summons, he not only must appear personally, but is not accorded any suspension privilege.  Note: The provisions of Section 7521 do not apply to criminal investigations or investigations into the integrity of any IRS employee. Comment: As mentioned above, Section 3502 of the IRS Restructuring Act (P.L. 105-206) requires the IRS to rewrite Publication 1, Your Rights as a Taxpayer, to inform taxpayers more clearly of their rights to be represented by a representative during an interview with the IRS and, if the taxpayer is so represented, that the interview may not proceed without the presence of the representative unless the taxpayer consents. An updated version of Publication 1 complying with these requirements was released by the IRS on December 29, 1998 (revised August 2000).

4. Reliance on Written Advice by the IRS

Under Section 6404(f), the IRS may abate any portion of any penalty or addition to tax attributable to reliance by the taxpayer on erroneous written advice by an officer or employee of the IRS acting in that officer's or employee's official capacity. The reliance must have been reasonable and in response to a specific written request by the taxpayer. No abatement is provided, however, of any penalty that is attributable to the taxpayer's failure to provide adequate and accurate information. 

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