Tax Tips: By law, taxpayers have the right to challenge the IRS’ position and be heard
Every taxpayer has fundamental rights when working with the IRS. Collectively their rights are known as the Taxpayer Bill of Rights. One of these is the right to challenge the IRS's position and be heard.
Here’s what this right means for taxpayers.
Taxpayers have the right to:
• Raise objections.
• Provide additional documentation in response to formal or proposed IRS actions.
• Expect the IRS to consider their timely objections.
• Have the IRS consider any supporting documentation promptly and fairly.
• Receive a response if the IRS does not agree with their position.
Here are some specific things this right provides taxpayers:
• In some cases, the IRS will notify a taxpayer that their tax return has a math or clerical error. If this happens, the taxpayer:
o Has 60 days to tell the IRS that they disagree.
o Should provide copies of any records that may help correct the error.
o May call the number listed on the letter or bill for assistance.
o Can expect the agency to make the necessary adjustment to their account and send a correction if the IRS upholds the taxpayer's position.
• Here's what will happen if the IRS does not agree with the taxpayer's position:
o The agency will issue a notice proposing a tax adjustment. This is a letter that comes in the mail.
o This notice provides the taxpayer with a right to challenge the proposed adjustment.
o The taxpayer makes this challenge by filing a petition in U.S. Tax Court. The taxpayer must generally file the petition within 90 days of the date of the notice, or 150 days if it is addressed outside the United States.
• Taxpayers can submit documentation and raise objections during an audit. If the IRS does not agree with the taxpayer's position, the agency issues a notice explaining why it is increasing the tax. Prior to paying the tax, the taxpayer has the right to petition the U.S. Tax Court and challenge the agency's decision.
• In some circumstances, the IRS must provide a taxpayer with an opportunity for a hearing before an independent Office of Appeals. The agency must do this before taking enforcement actions to collect a tax debt.
o These actions include levying the taxpayer's bank account. Immediately after filing a notice of federal tax lien in the appropriate state filing location.
o If the taxpayer disagrees with the decision of the Appeals Office, they can petition the U.S. Tax Court.
... See MoreSee Less
Tax Tips: What taxpayers should do if they receive mail from the IRS
IRS sends notices and letters when it needs to ask a question about a taxpayer’s federal tax return, let them know about a change to their account or request a payment. Don’t panic if something comes in the mail from the IRS – they’re here to help.
When a taxpayer receives mail from the IRS, they should:
Read the letter carefully. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes any steps the taxpayer needs to take. A notice may reference changes to a taxpayer's account, taxes owed, a payment request or a specific issue on a tax return. Taking prompt action could minimize additional interest and penalty charges.
Review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return and keep it for their records. Typically, a taxpayer will need to act only if they don't agree with the information, if the IRS asked for more information or if they have a balance due.
Take any requested action, including making a payment. The IRS and authorized private debt collection agencies do send letters by mail. Taxpayers can also view digital copies of select IRS notices by logging into their IRS Online Account. The IRS offers several options to help taxpayers struggling to pay a tax bill.
Reply only if instructed to do so. Taxpayers don't need to reply to a notice unless specifically told to do so. There is usually no need to call the IRS. If a taxpayer does need to call the IRS, they should use the number in the upper right-hand corner of the notice and have a copy of their tax return and letter.
Let the IRS know of a disputed notice. If a taxpayer doesn't agree with the IRS, they should follow the instructions in the notice to dispute what the notice says. The taxpayer should include information and documents for the IRS to review when considering the dispute.
Keep the letter or notice for their records. Taxpayers should keep notices or letters they receive from the IRS. These include adjustment notices when the IRS takes action on a taxpayer's account. Taxpayers should keep records for three years from the date they filed the tax return.
Watch for scams
The IRS will never contact a taxpayer using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure whether they owe money to the IRS can view their tax account information on IRS.gov.
... See MoreSee Less
Tax Tips: IRS releases final guidance for certain clean vehicle credits under the Inflation Reduction Act
WASHINGTON – The Internal Revenue Service issued final regulations today for the new and previously owned clean vehicle credits.
The final regulations provide rules regarding the critical mineral and battery components requirements for the new clean vehicle credit. Today’s guidance finalizes rules for taxpayers intending to transfer the new and previously owned clean vehicle credits to dealers who are eligible to receive advance payments as well as provides rules regarding the process for dealers to become eligible entities to receive advance payments of the transferred credits.
The final regulations also provide guidance regarding the IRS compliance process in the case of the taxpayer’s omission of a correct vehicle identification number.
Lastly, today’s regulations finalize the rules for qualified manufacturers of new clean vehicles to determine if the battery components and applicable critical minerals contained in a vehicle battery are foreign entity of concern (FEOC) compliant. For purposes of the FEOC-compliance requirements, the final regulations:
• Provide relevant definitions;
• Impose a due diligence requirement for battery components and applicable critical minerals;
• Describe the methods by which FEOC-compliance is determined; and
• Outline a reporting and review process for determinations of FEOC-compliance.
The Inflation Reduction Act allows a maximum credit of $7,500 per new clean vehicle, consisting of $3,750 in the case of a new vehicle that meets certain requirements relating to applicable critical minerals and $3,750 in the case of a new vehicle that meets certain requirements relating to battery components.
In addition to the critical minerals and battery components requirements and FEOC-compliance requirements, to qualify for the new clean vehicle credit, the vehicle must meet certain requirements, including satisfaction of an MSRP limitation, and the taxpayer claiming the credit must meet certain requirements, including income limitations.
The previously owned clean vehicle credit is a credit of up to $4,000 for the purchase of an eligible previously owned clean vehicle with a sale price of $25,000 or less that is placed in service during a tax year by a qualified buyer. To claim the credit, a qualified buyer must meet certain income limitations and the vehicle must meet specified eligibility requirements.
More information can be found on the Inflation Reduction Act of 2022 page on IRS.gov.
... See MoreSee Less