Prior to your first meeting with
the auditor, the IRS will notify you of how the audit process works and of
your rights, including the right to appeal.
You will also be notified of the
tax due, along with any interest and penalties. Thanks to your new rights under
the law, you may not have to pay a penalties - if your tax deficiency occurred
because you relied on advice requested earlier from the IRS, and you have
written instructions from the agency to prove it.
You will not have to pay interest
due if the IRS made a mistake that caused your delay - for example, by
providing you with erroneous information.
At the time of the interview with
the auditor, you have the right to end the interview until you've had a chance
to meet with your attorney or CPA.
You can avoid having to appear in
person as long as you have a CPA or other qualified professional to represent
you during the audit.
The IRS must make a reasonable effort
to accommodate you in regards to the time and place of the meeting.
You have the right to put the
interview on tape or make a record - which could help document your case
should you decide to sue the IRS at a later date.
If you do owe back taxes with
interest and penalties, but you cannot afford to pay, you can arrange an
installment payment plan for a modest processing fee.
You also have the right to be
represented by an ombudsman from the Taxpayer Advocate's Office, who can
issue a taxpayer assistance order if he or she believes that an IRS levy
of your bank account or other assets might create serious hardship for you
and your business.
Although the IRS can force the
sale of property of higher value than your tax obligation, it can no longer
sell items having substantial personal value to you, but only trivial market
value, for example, used household goods or clothing.
IRS collectors can no longer levy
a private residence without higher level approval, nor can they seize goods
with a sale value that would be less than the expense of their levy and sale.
The burden of proof has shifted
from you to the IRS. If the IRS can't demonstrate that it was substantially
justified in its claims, they will have to reimburse you for attorney's fees
and other court costs.
Also, you can sue the IRS and
collect up to $1 million on top of your court costs if you can prove that
the IRS recklessly disregarded collection procedures in pursuing your assets.
The new law doesn't let business owners and other taxpayers off the hook. If
you owe taxes, you're still required to pay them. The law does, however,
protect you from callous and overzealous IRS collectors, and also gives you
more time and payment options if you are delinquent - especially if you would
face special hardships.
Just as important, the Taxpayer Bill of Rights allows you to turn the tables
on the IRS and sue the government if you've been unfairly treated.
