Taxpayer Rights During an Audit Examination

Taxpayer Rights During an Audit Examination
Various statutes, including the three Taxpayer Bills of Rights (now part of the Internal Revenue Code), regulations other guidance and the manual provide taxpayers with a number of rights during the audit process. These include:
♦ Right to an explanation of the audit process; (1)
♦ Right that certain information be provided to taxpayers when a Service employee contacts them in any manner; (2)
♦ Right to have the examination at a specified, reasonable time and place for the taxpayer and its advisers; (3)
♦ Right to representation, or to consult an authorized representative, during interviews by the Service; (4)
♦ Right to have communications to all tax practitioners who are authorized to represent the taxpayer before the Service be held confidential; (5)
♦ Right to be notified of the service of a summons on a third party and the opportunity to petition to quash such a summons; (6)
♦ Right to receive advance notice from the Service of its intent to make third-party contacts, and upon request, the right to receive a record of such third-party contacts on a periodic basis; (7)
♦ Right to record any interview with the Service; (8)
♦ Right to freedom from repeat examinations; (9)
♦ Right to present witnesses; (10) and
♦ Right to have an independent Appeals function review the taxpayer's case, including a prohibition of ex parte communications between Appeals officers and other Service employees. (11)
○ All of these Rights are subject to limitations, but most of them are backed up by administrative or judicial remedies available to the taxpayer, such as a cause of action under §7433 for wrongful collection action.
Footnotes:____________________________                                                        .
(1) IRC §7521(b)(1)(A) the Service discharges this obligation by sending Publication 1 with its initial contact letters.
(2) Pub. L No. 105-206, §3705, 1998 Reform Act (off-code provision), 112 Stat. 685
(3) IRC §7605
(4) IRC §7521(b)(2). Representative must be authorized to practice before the Service. Id.; Treasury Dept. Circular No. 230, 31 CFR §10
(5) IRC §7525
(6) IRC §7609
(7) IRC §7602(c); Reg. §301.7602-2
(8) IRC §7521(a)(1); Notice 89-51, 1989-1 CB 691. See also Lit. Guid. Memo GL-17, 2000 TAX NOTES TODAY 97-23 (May 10, 2000)
(9) If a taxpayer has been audited on the same issue(s) in either of the last two preceding years, with little or no resulting change in tax liability, the taxpayer should request, in response to the initial contact from the Service, that these issues be excluded from the Service, that these issues be excluded from the examination or the examination be closed. IRM 4.10.2.4.2; IRM 4.10.2.8.5
(10) Rev. Proc. 68-29, 1968-2 CB 913
(11) Pub. L. No. 105-206, §1001(a)(4), 1998 Reform Act (an off-Code provision), 112 stat. 685 See also Notice 99-50, 1999-2 CB 444; Rev. Proc. 2000-43, 2000-2 CB 404
________________________________
This excerpt was taken from the chapter, "Taking the Mystery Out of Examinations -- the Audit Process," which appears in the 5th Edition of Effectively Representing Your Client Before the IRS: A Practical Manual for the Tax Practitioner With Sample correspondence and Forms. Published by the Section of Taxation of the American Bar Association.