While some Social Security strategies have been discontinued, there are still a few under-utilized strategies…
The Bill of Rights assures and protects therights of every American citizen.
But did you know that you have a second Bill of Rights, one that protects you as a taxpayer?
What’s more, the Taxpayer’s Bill of Rights contains ten crucial items, just like the original it was modeled on.
Larry Gibbs, first documented these essential rights when he was the IRS Commissioner in 1988.
So here are your rights as a taxpayer:
- The right to be informed.
- The right to quality service.
- The right to pay no more than the correct amount of tax.
- The right to challenge the IRS’s position and be heard.
- The right to appeal an IRS decision in an independent forum.
- The right to finality.
- The right to privacy.
- The right to confidentiality.
- The right to retain representation.
- The right to a fair and just tax system
Let’s take a quick look at some of these rights.
Number three is downright crucial: your right to pay not one cent more than the correct amount.
In other words, you have the right to take a deduction without fear of questioning if you feel there is a good, reasonable basis for that deduction.
The most unfortunate fears a taxpayer can have are: “do not deduct it if there is any chance the IRS will question it” and “I am just going to pay so IRS leaves me alone.”
Of course you should shun anything illegal, but clearly you have the right to keep as much of your own money as the law permits.
And rest assured – in the thousands of pages of IRS code there are more grey areas than black and white.
In addition to that, if there is substantial reason for the deduction, it goes in favor of the taxpayer.
In fact, we should try to prove Will Rogers’ famous quote wrong: “Income tax has made more liars out of the American people than golf.” Because you have the right to as many genuine deductions as you can get.
After all, there is a big difference between the taxpayer trying to figure out the deductible portion of a church mission trip and the taxpayer who says “Let’s just put down $5000” without any proof.
That brings us to number four, the right to challenge the IRS.
It’s not well known, but the fact is that the IRS loses as many battles with taxpayers as they win.
The right to appeal to an independent forum is the only peaceful way to stop an oppressive regime.
And that’s precisely why you have this right when it comes to your tax returns.
Fortunately, the IRS does not have the last word. Independent judges do.
Some of the other short statements of rights are vague.
For instance, you can go to Publication 1 to better understand what “finality” means.
Or you can look up how they define “quality.”
And further, if you are one of the many taxpayers who have had others file tax returns with your SS number requesting refunds, then you probably wonder how to enforce rights number seven and eight.
Now let’s turn to the tenth and last right on the list.
Unfortunately, IRS Publication 1 defines right number ten “a fair and just tax system” very differently then what you would expect.
Here it is:
“Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels”.
I respectfully differ on a few of those points.
For example, I think of a fair and just tax system as one that all taxpayers pay an equivalent and fair share — without all of the complicated and arbitrary social engineering.
I think of a tax system that has the most fortunate pay a fair share, not one that aggressively targets the wealthy.
I think of a tax system that is the same today and tomorrow. That way, you don’t lose a tax break because you filed on this day instead of that day.
All of that said, I suppose the rights we have are the best we can expect.
You see, “We the People” did not write them — the IRS did.