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The taxpayers' bill of rights: three years later.

Enacted in 1988, the Taxpayer's Bill of Rights was designed to stem some of the perceived administrative abuses that occurred in the IRS' examinations and collections processes.

NSPA's Federal Taxation Committee recently had the opportunity to discuss the Bill of Rights and its three years of implementation as a prelude to hearings held by the House Ways and Means Oversight Subcommittee in late September. The hearings were designed not only to ferret out potential areas of abuse, but more importantly, to elicit suggestions for additional procedural safeguards that Congress might consider.

Many of the reforms included in the Bill of Rights have been beneficial to taxpayers. The requirement that taxpayers be advised in writing of their rights at the start of any IRS contact, for example, has often helped to set the tone for an appropriate, professional and courteous dialogue.

Nevertheless, concerns have been expressed from many quarters as to how well the Taxpayer Bill of Rights has been implemented. Others suggest that further reforms are necessary.

Testifying at the hearing was IRS Commissioner Fred T. Goldberg, Jr., who had some suggestions of his own to add to the debate. Specifically, he recommended the following six statutory changes to enhance taxpayer rights:

1. Extend from 10 to 21 days the interest-free response period for taxpayers with a total federal tax liability on the first notice of $100,000 or less;

2. Allow taxpayers to change their filing status from married filing separate to married filing joint without full payment of the amount that would be due on a joint return;

3. Give to IRS the discretionary authority to withdraw a notice of lien before a debt is fully paid if it is determined that such withdrawal will serve the best interests of the taxpayer and the government;

4. Allow IRS to return levied-upon amounts when: (a) banks erroneously remit funds from levied-upon accounts before the passing of the statutory 21-day holding period; (b) IRS concludes that an earlier "jeopardy" levy was not warranted; and (c) IRS makes a levy in violation of an installment agreement;

5. Streamline the statutory requirements for accepting offers-in-compromise; and

6. Extend to all other taxes it administers the 45-day period which IRS currently is afforded with regard to processing income tax refunds.

The Commissioner's proposals certainly are meritorious and deserve the careful consideration of both the practitioner community and, more importantly, the Ways and Means Committee.

Nevertheless, other views on taxpayer rights were present at the hearing. Two important issues emerged from both the hearing and the Federal Tax Committee meeting.

First, some believe that the issue of where an audit can be scheduled was "glossed over" in the 1988 reforms. Many practitioners are concerned over IRS' ability to unilaterally schedule an audit at a taxpayer's place of business, over objections that the books and records are located elsewhere (i.e., the practitioner's office). These practitioners feel that the motives for such an action are often other than legitimate tax administration needs. Because the Taxpayer's Bill of Rights left the IRS with broad discretion in this area, these practitioners argue that more stringent standards are required.

Second, although the Bill of Rights requires IRS personnel to instruct taxpayers of their rights, the practical application of this requirement is somewhat difficult when agency contact is initiated by telephone. By comparison, it is a fairly straight-forward matter to provide taxpayers with a copy of Publication Number 1, "Your Rights as a Taxpayer," when contact is initiated through an in-person contact such as an office audit. The concern is that when IRS personnel contact taxpayers by telephone to arrange an appointment, it is not possible to adequately disclose to a taxpayer his or her rights under the Bill of Rights. Thus, routine information, such as the right to representation, often fails to be communicated to an already-flustered taxpayer. To compound the problem, it has been suggested that some IRS personnel take advantage of these telephone contacts to obtain more than just the information necessary to schedule an appointment; that is, they surreptitiously begin the audit then and there. To the extent that this does occur, it is a fairly blatant violation of the Taxpayer's Bill of Rights.

Many other issues regarding taxpayer rights were discussed at the Oversight hearings that are too numerous to mention. A fairly clear consensus has emerged; however, further action may be warranted.

To this end, it is very important to both the NSPA and the Federal Taxation Committee to understand the views of its membership on this important issue. To effectively represent independent accountants and tax practitioners in this on-going dialogue, NSPA needs to hear from you! What are your views on Commissioner Goldberg's proposals? On other aspects of Taxpayer Rights? How well has the IRS fared in implementing the Bill of Rights over these past three years?

We'd like your observations, both good and bad. Please send your comments to: NSPA Tax Counsel, 1010 North Fairfax Street, Alexandria, Virginia 22314, FAX (703) 549-2984. (No phone calls, please!) We look forward to hearing from you.
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Title Annotation:Capitol Corridors
Author:Berkery, Peter M., Jr.
Publication:The National Public Accountant
Article Type:Column
Date:Nov 1, 1991
Previous Article:Basic information on the state legislative process.
Next Article:Exclusive use test for a home office.

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