Part 2 of 4
For many taxpayers, interacting with the IRS is unavoidable. Even when you, or your accountant have done nothing wrong the IRS may have questions. Their inquiries could be as simple as verifying your identity before releasing your refund, or so complex that you feel like you need a PhD in tax to understand them. In either case, you need to know what to expect, and more importantly, you need to know your rights so that you can protect them.
FACT: The IRS will not tell you your rights, and will attempt to bully you into acting against your rights.
First, you have the right to know what you need to do to comply with the tax laws. You are entitled to a clear, plain-English explanation of the applicable tax laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. If you receive a letter that you simply do not understand, it is your right to have that letter explained to you by the IRS. Further, you have the right to ask as many questions as you like and to receive clear explanations of the potential outcomes before taking action.
Often the IRS documentation and explanations are difficult for a taxpayer to understand. Perhaps the IRS hopes that the taxpayer will simply pay the amounts proposed without seeking to understand how an amount is calculated. Or worse, without confirming that you in fact owe the amount they have assessed. You can insist that the IRS provide you a complete explanation with supporting documentation related to all tax matters.
If you do not feel like you’re getting clear information from the IRS, and you need help, you have the right to retain an authorized representative of your choice to represent you in your dealings with the IRS. This representative should be well versed in dealing with the IRS and is either a CPA, lawyer or Enrolled Agent. A family member can also be appointed to represent you. If you cannot afford to have someone to represent you, you can seek assistance from a Low Income Taxpayer Clinic.
Many taxpayers attempt to resolve their tax matters without representation. Unfortunately doing so pits you against an IRS agent who is very knowledgeable of the tax laws and is well versed in how to use them to their advantage. The average taxpayer does not have that same knowledge and can inadvertently put themselves at a disadvantage by addressing what appears to be a reasonable request, but that result in them being bullied in many cases without their knowledge. Generally speaking, it is advisable to seek representation from someone who has the same knowledge as the IRS agent, and who aims to use that knowledge to your advantage.