The IRS Violates Taxpayer Rights Again

The IRS Violates Taxpayer Rights Again

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If the IRS followed its own procedures and honored the three Taxpayer Bills of Rights, fewer taxpayers would need to hire a tax attorney, CPA or enrolled agent to represent them. But time and again IRS officials, often with the blessing of their supervisors, engage in actions that are illegal.

For example, the Treasury Inspector General For Tax Administration (TIGTA), which oversees the IRS and attempts to ensure that its employees and agents are following the law and their own procedures, reported that the IRS is violating taxpayer rights by failing to follow its own regulations for notifying taxpayer representatives and processing undelivered lien notices:

The report reviewed a statistically valid sample of 105 Notices of Federal Tax Lien filed for the 12-month period ending June 30, 2011, and determined that the IRS mailed taxpayers lien notices in a timely manner as required.

However, the IRS did not always follow its own regulations for notifying representatives of the filing of the tax lien notices. IRS regulations require that taxpayer representatives be given copies of all correspondence issued to taxpayers. TIGTA estimated that 43,817 taxpayers may have been adversely affected because the IRS did not follow the requirements to notify the taxpayers’ representatives of the taxpayers’ rights related to liens.

In addition, when an initial lien notice is returned undelivered and a different address is available for the taxpayer, the IRS does not always meet its statutory requirement to send the lien notice to the taxpayer’s last known address.

The failure to send the lien notice to the taxpayer’s representative is part of an IRS pattern to disrespect and diminish the role of taxpayer representatives in the collections and compliance process.

Two days ago I was hired by a taxpayer who had just undergone an audit and had agreed, under pressure, to adjustments made by the IRS examiner. She told me that the examiner had told her not to hire a representative because “when you do that I get suspicious.” The taxpayer believed the examiner and attempted to handle the audit alone and ended up agreeing to significant adjustments reclassifying her active rental losses into passive losses. I reviewed her tax return and her detailed records and concluded that she had, in fact, materially participated in those activities and that the adjustments were wrong.

Telling taxpayers that they should not hire a representative or that the hiring of one will make their tax problems worse is a blatant and illegal violation of the Taxpayer Bill of Rights which specifically entitles taxpayers to representation. In the last twenty years I have encountered at least a hundred instances where an IRS official tried to intimidate the taxpayer into not hiring a representative or, even worse, firing the one he had. The reason they do this is clear: It is highly likely that the tax representative knows more about the law than the IRS official does, has more education, is better trained and better motivated. In short, the existence of a tax professional makes the IRS official accountable to someone other than a person she lunches with every day.

This nonsense has to stop. I have reported the agent described above to The National Taxpayer Advocate, Nina Olson, and The Director of TIGTA, J. Russell George.

If you are contacted by IRS collection agents or IRS auditors, you should at a minimum meet with a tax attorney, CPA or IRS enrolled agent to discuss your options. The Pappas Group does not charge taxpayers for an initial consultation.

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida