The Internal Revenue Service has adopted a "Taxpayer Bill of Rights" that it said would become a cornerstone document to provide the nation's taxpayers with a better understanding of their rights.
The Taxpayer Bill of Rights takes multiple existing rights that have already been included in the Tax Code and groups them into 10 broad categories, making them more visible and easier for taxpayers to find on IRS.gov.
Publication 1, "Your Rights as a Taxpayer," has been updated with the 10 rights and will be sent to millions of taxpayers this year when they receive IRS notices on issues ranging from audits to collection. The rights will also be publicly visible in all IRS facilities for taxpayers and employees to see.
"The Taxpayer Bill of Rights contains fundamental information to help taxpayers," said IRS Commissioner John A. Koskinen in a statement. "These are core concepts about which taxpayers should be aware. Respecting taxpayer rights continues to be a top priority for IRS employees, and the new Taxpayer Bill of Rights summarizes these important protections in a clearer, more understandable format than ever before.”
The IRS released the Taxpayer Bill of Rights following extensive discussions with the Taxpayer Advocate Service, an independent office inside the IRS that represents the interests of U.S. taxpayers. Since 2007, adopting a Taxpayer Bill of Rights has been a goal of National Taxpayer Advocate Nina E. Olson, and it was listed as the Advocate’s top priority in her most recent Annual Report to Congress.
“Congress has passed multiple pieces of legislation with the title of Taxpayer Bill of Rights,’” Olson said. “However, taxpayer surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS and even fewer can name their rights. I believe the list of core taxpayer rights the IRS is announcing today will help taxpayers better understand their rights in dealing with the tax system.”
The Tax Code includes numerous taxpayer rights, but they are scattered throughout the code, making it difficult for people to track and understand. Similar to the U.S. Constitution’s Bill of Rights, the Taxpayer Bill of Rights contains 10 provisions. They are:
1. The Right to Be Informed
2. The Right to Quality Service
3. The Right to Pay No More than the Correct Amount of Tax
4. The Right to Challenge the IRS’s Position and Be Heard
5. The Right to Appeal an IRS Decision in an Independent Forum
6. The Right to Finality
7. The Right to Privacy
8. The Right to Confidentiality
9. The Right to Retain Representation
10. The Right to a Fair and Just Tax System
The rights have been incorporated into a redesigned version of Publication 1, a document that is routinely included in IRS correspondence with taxpayers. Millions of these mailings go out each year. The new version has been added to IRS.gov, and print copies will start being included in IRS correspondence in the near future.
The timing of the updated Publication 1 with the Taxpayer Bill of Rights is critical because the IRS is in the peak of its correspondence mailing season as taxpayers start to receive follow-up correspondence from the 2014 filing season. The publication initially will be available in English and Spanish, and updated versions will soon be available in Chinese, Korean, Russian and Vietnamese.
The IRS has also created a special section of IRS.gov to highlight the 10 rights. The web site will continue to be updated with information as it becomes available, and taxpayers will be able to easily find the Bill of Rights from the front page. The IRS internal web site for employees is adding a special section so people inside the IRS have easy access as well.
As part of this effort, the IRS will add posters and signs in coming months to its public offices so taxpayers visiting the IRS can easily see and read the information.
"This information is critically important for taxpayers to read and understand,” Koskinen said. “We encourage people to take a moment to read the Taxpayer Bill of Rights, especially when they are interacting with the IRS. While these rights have always been there for taxpayers, we think the time is right to highlight and showcase these rights for people to plainly see.”
“I also want to emphasize that the concept of taxpayer rights is not a new one for IRS employees; they embrace it in their work every day,” Koskinen added. “But our establishment of the Taxpayer Bill of Rights is also a clear reminder that all of the IRS takes seriously our responsibility to treat taxpayers fairly. The Taxpayer Bill of Rights will serve as an important education tool, and we plan to highlight it in many different forums and venues.”
During a conference call with reporters Tuesday, Accounting Today asked Koskinen and Olson about whether tax preparers would also be able to assert the Taxpayer Bill of Right on behalf of clients.
“Absolutely,” Olson responded. “Between November 2013 and February 2014, my office conducted 32 focus groups around the country, 16 with taxpayers and 16 with preparers, including CPAs. It was interesting. The preparers felt unanimously that this was an incredibly helpful thing to have and enabled them to explain sort of the process in a way and the protections to their clients and that they would like very much to have brochures or to see it in Pub 1 because it would really help educate their clients. It probably will help educate some preparers as well, particularly those that are not what we would call Circular 230 preparers—the attorneys, the accountants, the CPAs, the enrolled agents, who may not know about these things.”
“We are delighted to encourage the taxpayers to be comfortable contacting us directly, particularly if they have questions,” Koskinen pointed out. “If they have difficulty becoming compliant, we’re happy to talk to them directly. But it is important for them to understand they don’t lose any rights and we don’t treat them any differently if they are represented by a certified accountant, preparer, enrolled agent, or attorney. We’re perfectly comfortable with that. We’re delighted when they choose to be represented. We want people to understand that you can deal with us directly, but if you have a representative, you won’t lose anything. We won’t treat you any differently. You still have the right to a fair and just system.”
They noted that the House has recently passed legislation containing an earlier version of Olson’s suggested Taxpayer Bill of Rights, but the Senate has not approved similar legislation, Olson noted.
Koskinen said the subject of a Taxpayer Bill of Rights had come up when he visited IRS offices across the country and met with employees after taking over as commissioner.
“One of the things I learned when I became commissioner back in December was the importance of taxpayer rights and also how focused our employees are on this issue,” he said. “Over the past several months I have visited dozens of IRS offices around the country and had the opportunity to see and hear the many ways our employees serve taxpayers and work to protect their rights. I also came to believe that we as an institution needed to do a better job of communicating taxpayer rights to the public and showing taxpayers how deeply we respect those rights.”
Koskinen said he would encourage taxpayers to take a look at the Taxpayer Bill of Rights, especially when they are interacting with the IRS. However, he pointed out that budget cuts at the IRS in recent years have had a negative impact on IRS taxpayer service. He and Olson had met to discuss which of the initiatives in her report to Congress could be implemented without costing much in IRS resources, and the Taxpayer Bill of Rights seemed to be at the top of the list, as it contained protections that were already included in the Tax Code.
“I also want to mention a concern I have in regard to taxpayer rights, and that involves our funding situation,” said Koskinen. “This is a concern that I know is shared by the Taxpayer Advocate. The IRS budget, as you know, has been reduced by more than $850 million, or about 7 percent since 2010. These reductions greatly complicate the work we do to ensure that we provide quality service, which is one of the 10 fundamental taxpayer rights. If we do not have adequate funding, that means we don’t have enough people answering the phones, taking care of correspondence, or staffing our walk-in taxpayer assistance sites. So I will continue making the case to Congress that the IRS needs adequate resources in order to properly serve taxpayers.”
Olson pointed out that she has long called for a Taxpayer Bill of Rights in her reports to Congress, and she had recommended that the IRS adopt its own Taxpayer Bill of Rights and not wait for Congress to codify it. Even though the various provisions are already scattered across the Tax Code, many taxpayers are not aware of them.
“I want to emphasize that this is a real issue that has real impact on taxpayers that the IRS is adopting the Taxpayer Bill of Rights,” said Olson. “The Taxpayer Advocate Service commissioned a survey in 2012 with a representative sample of United States taxpayers and we found that only 46 percent of U.S. taxpayers believed that they had rights before the IRS. That is, 54 percent of them did not believe that they had rights before the IRS or just didn’t know, and only 11 percent of taxpayers knew what those rights were. Let me emphasize, if you don’t know what your rights are, you will never avail yourself of those rights and things will happen to you.”