The IRS should include IRS Publication 1 with its audit notice. This publication outlines “Your Rights as a Taxpayer.” You should review these rights, since they highlight problems the IRS has had with their employees in the past. They can help you keep the IRS auditor on track.
Your taxpayer rights include the right to:
- A detailed explanation of the Request for Information and the reasoning behind such a request. You have the right to inquire why your tax return was selected for an audit, why the IRS is asking for specific information, and how they plan to use it. Under this right, the IRS should also inform you of what will happen, if you can’t provide the information requested.
- Fair and Courteous Treatment. Suppose the IRS employees handling your audit are not professional and courteous. In that case, you have the right to get in touch with their superiors or the local IRS director, if you are still unsatisfied with the supervisor’s response.
- Disagree with Proposed Adjustments and Request Another Review. You can disagree with the decision of the IRS and provide additional information to support your position. The IRS should consider your request and inform you of their decision promptly.
- Pay Only the Correct Amount of Tax. Under the law, you should only pay the correct amount of tax due and nothing more. You may request to make installment payments, if you can’t pay the total amount.
- Appeal the IRS Decision. When you disagree with the IRS’s final decision, you have the right to lodge an appeal or take the matter to court.
- Hire a Representative to Deal With the IRS. Instead of dealing with the IRS directly, you can authorize a qualified professional to be your representative. While there are some exceptions, the IRS can’t contact you directly or force you to appear before them.
While these rights may seem inconsequential, you should be prepared to quote Publication 1, if you have even the slightest concerns about how the audit is progressing or being handled.
During the audit process, IRS employees must comply with the Internal Revenue Manual or IRM. The IRM is the IRS’s policy and procedure guide. It sets out very detailed instructions on how the IRS auditor is to carry out the audit. The IRM can be found online at irs.gov/irm. There is a table of contents that sets out various topics. You are looking for Part 4. The table of contents for Part 4 can help you find information relevant to your audit.
While you do not need to read the IRM, it does not hurt to skim it for pertinent information to your audit if you have time. It can be referenced later, if you end up having a problem or dispute with the IRS.
If the IRS auditor does not adhere to the Taxpayer Bill of Rights or policies set out in the IRM, you will likely need to raise this as a concern with the IRS auditor’s manager. Politely asking the IRS auditor for their manager’s name and phone number and talking to the manager can notify the IRS auditor that you will enforce your rights, ensuring that your audit goes smoothly.