Why We Need a Taxpayer Bill of Rights

Last year, in a nationwide survey of U.S. taxpayers who had filed a 2010 tax return, the Taxpayer Advocate Service asked whether respondents believed they had rights before the IRS. We also asked if they knew what their rights as a taxpayer were when dealing with the IRS. Astonishingly (to me, at least), only 9% of respondents said they believed they had rights before the IRS. Fifty-five percent said they believed they had no rights and another 21% said they weren’t sure. (Fifteen percent didn’t answer the question.)

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Are IRS Correspondence Audits Really Less Burdensome for Taxpayers?

In my last blog posting, I discussed how the IRS’s growing use of “unreal” audit “touches” both increases its compliance coverage of individual taxpayers and, in my opinion, potentially violates taxpayers’ rights by subjecting them to repetitive audits of a particular tax return. In this posting, I explore the impact on individual taxpayers of the IRS’s increasing use of correspondence examinations.

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What’s an Audit, Anyway?

The IRS’s recently released Fiscal Year (FY) 2011 Enforcement and Service Results, show some interesting trends in its audit activity. For example, face-to-face audits of individual taxpayers reporting income over $200,000 increased by 34 percent as compared with FY 2010, from 58,521 to 78,392. Also, the IRS is now auditing about one out of every eight taxpayers who reported over $1 million in income.

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