Guide To Your Rights As A Taxpayer: 2

(Series 2 of 3. For post 1 click here.)

Appeal

You have the right to appeal any action that is taken against you by the IRS in the changing of your account. To do so you must contact the Appeals Office of IRS. Most differences can be settled without expensive and time-consuming court trials. Your appeal rights are explained in depth in Publication 5. In the event you do not wish to use the Appeals Office or disagree with its stance at your appeals conference, you may be able to take your case to the U.S. Tax Court, U.S. Court of Federal Claims, or the U.S. District Court where you live.

If you take your case to court, the IRS will have the burden of proof, meaning they must proving certain facts, given you kept adequate records to show your correct tax liability, cooperated with the IRS, and meet certain other conditions. DO NOT use the appeal system of the IRS to cause an intended delay, or if your position is “frivolous” and “groundless”. In such cases, the Tax Court could hit you with a $25,000 penalty.

If the court agrees with you on most of the issues in the case, finding that the IRS’ position was largely unjustified, you may be able to recover some of your administrative and litigation costs as well. You cannot be free of these costs unless you tried to resolve your case administratively, which means you attempted to use the appeals system, and you gave the IRS necessary information in the resolution of the case.

The appellate process and your rights are explained in full in Publication 556, Examination of Returns, Appeals Rights, and Claims for Refund.

Fair Collection

When you owe the IRS taxes, they send a bill. You have the right to have the bill adjusted if the amount is incorrect. If the IRS says you owe because of an error in math on your part, you have a right to request they send a “notice of deficiency” so that you can start to file a dispute (like discussed earlier). The additional tax doesn’t have to be paid immediately, if you ask for the notice within 60 days of being made aware of the error.

The IRS is also required to offer special payment arrangements to qualifying individuals. Only after every avenue has been exhausted or if you refuse to comply correctly, can the IRS use enforcement action.