What Are My Rights As A Taxpayer If Audited?

This article will discuss your basic rights as a taxpayer. We will cover the following points:

• Should you fear an audit?
• What are my fundamental rights during an audit?
• Additional restrictions on IRS employees and agents
• Should I get a lawyer if audited?

Should You Fear an Audit?

The word “audit” tends to send chills down the spine of most taxpayers—especially business owners. It’s understandable to fear a tax audit of your business and personal finances. No one wants a government agency pouring over their financial history. The extra administrative work involved in dealing with an audit is reason enough to keep taxpayers in line. However, audits generally get a bad rap. Most of us have only heard of an audit as a bad thing that happens to people who have done something wrong; thus, receiving notification of an impending audit tends to elicit panic. 

Should we fear being audited? Generally, no. Only around 1% of taxpayers are audited each year. For the great majority of Americans, their only interaction with the IRS will be the yearly filing of taxes. And even if the IRS audits you, if you’ve kept your taxes in order, you have nothing to worry about beyond the extra leg work of providing the IRS with the documents they request. Furthermore, the IRS must uphold a taxpayer’s rights over all else, even during an investigation. 

What are My Fundamental Rights During an Audit?

There are ten distinct rights described in the U.S. Tax Code. They are:

1. The Right to Be Informed: Taxpayers have the right to access information that details what they need to do to comply with tax laws. The IRS and its governing bodies must provide clear explanations of the law and the procedures associated with all tax documents, publications, notices, and correspondence. They have the right to be notified of IRS mandates regarding their taxes and to receive clear explanations of the results.
2. The Right to Quality Service: Taxpayers have the right to receive timely, courteous, clear, and professional service when dealing with the IRS. They should expect written correspondence and spoken communication to be easy to understand. They have the right to talk to a supervisor about inadequate service.
3. The Right to Pay No More Than Legally Due - Taxpayers have the right to pay only the amount of taxes legally due, including interest and penalties, and should expect the IRS to apply all payments correctly.
4. The Right to Challenge the IRS: Taxpayers have the right to file an objection and challenge any formal IRS response. The taxpayer should be prepared to provide documentation to support their claim, and they should file their objection on time. The taxpayer should expect prompt and fair consideration of their protest and a written response detailing the IRS’s position.
5. The Right to Appeal an IRS Decision in an Independent Forum - Taxpayers have the right to a fair and impartial appeal of most IRS rulings, including penalties, and the right to receive written correspondence regarding the Office of Appeals’ decision. Taxpayers can usually take their case to court.
6. The Right to Finality: Taxpayers have the right to know the deadlines and statute of limitations for challenges to the IRS, audits, and filing dates. The taxpayer also has the right to know when an audit is complete and the result.
7. The Right to Privacy: Any IRS action, including an inquiry, examination, or enforcement, should follow the law and be no more intrusive than what is necessary. The IRS shall comply with all due process rights, including search and seizure protections.
8. The Right to Confidentiality: Any information provided by the taxpayer to the IRS shall not be disclosed to a third party unless authorized by the taxpayer or by law. Taxpayers can expect proper action to be taken against any IRS employee or agent that wrongfully discloses confidential taxpayer information.
9. The Right to Retain Representation: Taxpayers can seek authorized legal representation when dealing with the IRS and can utilize a Low Income Taxpayer Clinic if they cannot afford representation.
10. The Right to a Fair and Just Tax System - Taxpayers have the right to a tax system that consistently evaluates its shortcomings, liabilities, ability to pay, and communication issues. Taxpayers experiencing financial difficulty or those whose tax issues have not been resolved have the right to prompt and timely assistance from the Taxpayer Advocate Service.

Additional Restrictions On IRS Employees and Agents

Taxpayers should expect that the IRS will not unlawfully target specific individuals and will follow the provisions outlined in still functioning tax acts, such as the Protecting Americans From Tax Hikes Act of 2015. Behavior such as utilizing personal e-mail accounts for government businesses or acting on behalf of a political agenda are prohibited.

Should I Get a Lawyer if Audited?

Generally, yes. Taxpayers that have an attorney who understands the tax system and will fight for their rights are more likely to receive a positive outcome when dealing with the IRS. If you have any questions about tax law and audits, give us a call at (630) 324-6666 or contact us online to learn more.