For most people, paying taxes is just part of life. Few people know their rights as far as taxes are concerned. However, the tax system is actually a form of social contract between the government (tax authority) and its citizens (the taxpayers). The taxpayers have a primary responsibility to pay taxes and the government has a responsibility to provide services to its citizens. This forms the framework of the relationship between the tax collector and the taxpayer. The law breaks down these rights and responsibility further. According to the federal law, taxpayer has 10 rights and 5 responsibilities towards their taxes. However, the majority of the taxpayers are unaware of these rights and responsibilities according to the 2011 National Taxpayer Advocate report by Nina Olson. In her report, she notes that although these rights and duties have been in the law for about 14 years now, the awareness is still low and therefore, many taxpayers have not been able to take advantages of such rights. The following are these rights and responsibilities as held in the U.S Federal laws:
The 10 Rights of Taxpayers
- Assistance – Every taxpayer has a right to get assistance from the IRS in case they have tax related needs.
- Information – The IRS and other tax authorities have an obligation to inform taxpayers of any tax matter that affects them in a form of media that is reasonably accessible to the taxpayer.
- Heard – Every taxpayer has a right to be heard. The IRS’s toll free number, the IRS website, and other contact points to the tax administrators are therefore, a right to the taxpayer.
- Appeal – In case of an audit or any determination by the tax authorities, the taxpayer has a right to appeal such decisions and determinations. The IRS has a chamber that handles appeals and this is a separate wing from those who handle the actual audits and investigations. Besides this, taxpayers have a right to further appeal disagreements with tax authorities in a tax court to the level of the Court of Appeal.
- Pay Only the Due Amount – The taxpayer has a right to only pay the tax bill that is rightfully due and not pay any amount in excess of this due amount.
- Privacy – The taxpayer has a right to privacy. The IRS cannot forward information about your tax records or any other information they hold about you to other parties, including government agents.
- Certainty – It is the responsibility of the tax authority to ensure that tax matters are not ambiguous or uncertain. This is a huge task for the IRS as the tax law is very complex and it is their responsibility to simplify it to the level that it is easily understood by all taxpayers.
- Confidentiality – The IRS has a duty to handle all matters regarding taxpayers in a confidential manner.
- Fair Taxation – The IRS and the law makers have a responsibility to ensure that the whole tax system remains fair, equitable and just to all taxpayers. This is yet, another complex responsibility for the tax authorities and the law makers. Given the complexity of the tax system, the issue of just and fairness continues to be a sensitive one.
- Representation – Every taxpayer has a right to be represented by a tax professional when dealing with the tax authority whether it is in an audit, audit appeal, or tax court case.
The 5 Duties of the Taxpayer
Below are the 5 responsibilities of the taxpayer:
- Pay Taxes – Every taxpayer has an obligation to pay due taxes within the required time.
- Honesty – The taxpayer has a duty to provide information that is truthful to the best of his or her knowledge.
- Cooperate – Every taxpayer has a responsibility to cooperate with the tax authority by providing information, allowing for audits and investigations, and answering questions asked by tax authorities within the requested time frame.
- Maintaining Tax Records – Taxpayers have a responsibility to keep the supporting documentation and records for tax entries in their return. The records should be kept at least for 3 years, although for cases of under reporting or fraud, records may be required for extended periods.
- Provide Information – The taxpayer also has a duty to reveal and provide any tax related information requested by the tax authority within the required time.
Hopefully, now that you are more informed about your rights and responsibilities as a taxpayer, you will have reasonable expectations from your relationship with the tax authorities.