Legal Definitions - taxpayer bill of rights

The term Taxpayer Bill of Rights (TABOR) refers to a set of fundamental protections and entitlements that individuals and businesses have when interacting with tax authorities, such as the Internal Revenue Service (IRS) at the federal level or state tax departments.

These rights are designed to ensure fair treatment, transparency, and due process throughout the tax collection and dispute resolution process. Federally, the IRS has codified ten specific rights, which broadly cover areas like the right to be informed, the right to challenge IRS decisions, the right to appeal, and the right to privacy and confidentiality regarding one's tax information.

Here are some examples illustrating the application of the Taxpayer Bill of Rights:

• Example 1: Understanding a Tax Notice

  Imagine Sarah receives a letter from her state's Department of Revenue stating she owes additional taxes from a previous year. However, the letter is vague and doesn't clearly explain why the additional amount is due or how it was calculated. Sarah feels confused and unsure how to respond.

  This situation highlights Sarah's right under the Taxpayer Bill of Rights to be informed. The tax agency has an obligation to provide clear, understandable explanations for their actions and decisions, allowing taxpayers to fully comprehend their tax obligations and the basis for any assessments. Sarah can request a more detailed explanation or clarification from the agency.

• Example 2: Disputing an Audit Outcome

  A small business owner, Mark, undergoes an audit by the IRS. After reviewing his records, the IRS proposes disallowing several of his business deductions, which Mark firmly believes are legitimate and properly documented. Mark disagrees with the IRS's assessment.

  Mark can invoke his rights under the Taxpayer Bill of Rights, specifically the right to challenge the IRS’s position and be heard, and the right to appeal an IRS decision in an independent forum. He can present his evidence and arguments to the IRS and, if the disagreement persists, he has the right to appeal the decision to an impartial body or court outside the initial IRS examination division.

• Example 3: Protecting Personal Information

  During a routine inquiry about a tax return, a taxpayer named Emily is concerned about the security of her sensitive financial information. She wants assurance that her personal data, like bank account numbers and income details, will not be improperly shared or accessed by unauthorized individuals.

  This scenario demonstrates Emily's rights under the Taxpayer Bill of Rights concerning privacy and confidentiality. Tax authorities are legally bound to protect taxpayers' personal and financial information, ensuring it is not disclosed without proper authorization or legal justification. Emily has the right to expect that her data will be handled securely and confidentially throughout her interactions with the tax system.