January 01, 1999
1999 Brings More Taxpayer Rights
The 1999 filing season brings dramatic expansions in the rights
of taxpayers. From new rules protecting innocent spouses to greater
power for the National Taxpayer Advocate, people will find an array
of new options available to assist them.
Taxpayer rights formed a central theme in the IRS Restructuring
and Reform Act of 1998, which was approved last summer by Congress
and signed July 22 by President Clinton. The new law accompanies
other IRS efforts to assist taxpayers, which are highlighted on
accompanying Fact Sheets.
Among the new provisions in place for this year's filing season:
MORE CLOUT FOR THE TAXPAYER ADVOCATE
The power of the National Taxpayer Advocate has been
significantly expanded by last year's law. The office works inside
the IRS to be an independent watchdog for taxpayers.
The expansion includes creating a national system of taxpayer
advocates serving in local IRS offices. These local taxpayer
advocates also work independently, reporting to the National
Taxpayer Advocate rather than other arms of the IRS.
One of their tools is the Taxpayer Assistance Order, which can
be requested by a taxpayer suffering or about to suffer a
"significant hardship" involving tax law administration. The orders
can be issued if the National Taxpayer Advocate determines a
significant hardship exists that justifies granting the emergency
The Taxpayer Assistance Orders can cover a variety of
circumstances, including keeping the IRS from taking action against
a taxpayer and requiring the release of taxpayer property.
Under the new legislation, several factors must be considered
before a Taxpayer Assistance Order can be issued:
- Whether the taxpayer faces an immediate threat.
- Whether there has been a delay of more than 30 days in
resolving the taxpayer's problem.
- Whether the taxpayer faces significant costs, such as legal
fees, if the order is not granted.
- Whether the taxpayer faces long-term harm if the order is
Taxpayers can use Form 911 to apply for a Taxpayer Assistance
EASIER ACCESS TO THE PROBLEM RESOLUTION PROGRAM
The National Taxpayer Advocate also has spotlighted the Problem
Resolution Program with a new toll-free number for people with
long-standing tax troubles.
The hotline for help -- 877-777-4778 -- is available for
taxpayers who haven't been able to promptly resolve problems through
normal IRS channels.
The call will put people in touch with the trouble-shooters at
the Problem Resolution Program. A personal taxpayer advocate WI be
assigned to each person to help clear up problems and ensure each
case is given a complete, impartial review.
For routine questions, taxpayers should first call
1-800-829-1040 before calling the Taxpayer Advocate's Problem
Resolution Program number.
MORE HELP FOR INNOCENT SPOUSES
The new law makes it much easier for an "innocent spouse" to
qualify for tax relief when their husband or wife makes an error on
a tax return.
When a married couple files a tax return jointly, each spouse is
fully liable for the taxes owed, along with any interest or penalty
due. Following enactment of the new law, there are now three
categories where an innocent spouse can seek help from the IRS:
- Traditional relief. The new law makes innocent spouse tax
relief available in situations where the other spouse makes
an error -- such as omitting income or claiming false
deductions or credits -- regardless of the amount of money
The innocent spouse seeking relief must not know about the
tax problem when the return was signed. In some cases,
partial relief is available if the spouse did not know the
extent of the tax understatement.
- Separate liability. The law allows divorced or separated
spouses to limit their liability on tax deficiencies
involving a joint tax return. In other words, a spouse may
elect separate liability on the amount owed, based on each
person's share of the items at issue.
This separate liability provision can apply to joint filers
who are divorced, widowed, legally separated or have not
lived together for the past 12 months.
- Equitable relief. The new law also allows the IRS to go one
step further and provide equitable relief in certain cases
where a spouse does not qualify for the traditional innocent
spouse relief or the separate liability provision.
For example, equitable relief may be granted when one spouse
did not know that the other spouse took money intended for
tax payments and used it for other purposes.
The IRS will normally grant equitable relief if the tax were
not paid when the joint return was filed, the requester is
divorced or separated, the requester did not know that the
tax would not be paid, and the requester would suffer undue
hardship if the relief was not granted. In addition, the IRS
will take into account a variety of other factors on
equitable relief requests, including hardship, spousal
abuse, divorce decree obligations and knowledge of the
underpayment or understatement of tax.
These three options can be requested by filing Form 8857.
MORE OPPORTUNITY TO MAKE INSTALLMENT PAYMENTS
The new law creates guaranteed access to installment payment
agreements in cases where the taxpayer owes $10,000 or less in
income taxes and cannot pay the entire tax bill immediately.
To qualify, several provisions must be met:
- The taxpayer must have filed income tax returns and paid
taxes during the previous five years.
- The taxpayer cannot have any previous installment agreements
during the five-year period.
- The taxpayer cannot pay the entire tax bill immediately.
- The taxpayer agrees to pay off the installment agreement in
- The taxpayer agrees to comply with the tax law and follow
the terms of the installment agreement.
After Dec. 31, 1999, the failure to pay penalty will be cut in
half for taxpayers who have made installment agreements with the
IRS. The monthly penalty rate on the amount owed drops from 0.5
percent to 0.25 percent.
The lower rate only applies in cases where a taxpayer filed the
original tax return in a timely manner and has not received a notice
of intent to levy.
NEW TAXPAYER SAFEGUARDS ON PAST-DUE TAXES
The new law expands taxpayer rights in situations where the IRS
seeks to collect past-due taxes. The law formalizes several steps
the IRS had instituted earlier.
Among the changes are procedures designed to guarantee due
process when the IRS moves to collect tax debts.
Taxpayers will now have the right to request a hearing before
an impartial appeals officer within 30 days after a notice of lien
has been filed or a notice of intent to levy has been sent. In
addition, the IRS will provide the taxpayer with a written
notification about this appeals right.
If the taxpayer requests a hearing during this period, the
proposed levy may not take place until after the appeals officer
makes a finding. The taxpayer also has 30 days to challenge the
appeals finding in U.S. Tax Court or U.S. District Court, during
which period the IRS may not levy.
The appeals provisions take effect Jan. 19.
During the appeals process, the taxpayer can also request the
IRS to consider establishing collection alternatives, such as
installment agreement, to pay off the tax bill.
Other new elements involving collection include:
- The new law prohibits seizures of residences, except rental
property, when there is a tax liability of $5,000 or less.
- The IRS must consider all other payment possibilities before
seizing a person's principal residence or assets of a
- A taxpayer's principal residence -- or that of a spouse,
former spouse or minor child -- may be seized only with a
- Taxpayers can seek civil damages of up to $100,000 if agency
workers negligently disregard the tax code or regulations
involving tax collection.
BURDEN OF PROOF SHIFTS TO IRS
When tax disputes wind up in court, the burden of proof on
factual issues no longer falls on the taxpayer in certain
circumstances. In these situations, it will be up to the IRS to
prove taxpayer liability, a switch from the old standard where the
agency's position was generally presumed correct unless shown
For the burden of proof to shift away from the taxpayer, the
legislation requires several criteria to be met:
- The taxpayer must present credible evidence relating to the
tax liability in dispute.
- The taxpayer must maintain records as required by the tax
- The taxpayer must comply with all substantiation
requirements of the tax code.
- The taxpayer must cooperate with reasonable requests by the
IRS for information, meetings and documents involving the
preparation of the tax return and treatment of items
included on the tax return.
- The burden of proof does not shift for corporations,
partnerships or trusts with net worths topping $7 million
OTHER NEW TAXPAYER RIGHTS
In other areas, the new law:
- Creates a limited confidentiality privilege involving
taxpayer communications with federally authorized tax
- Expands IRS authority to award administrative costs and
other fees in tax disputes, including payment of attorneys'
fees for taxpayers.
- Suspends interest and most penalties for individual
taxpayers if the IRS fails to provide a tax liability notice
within 18 months after a return is filed in a timely manner.
- In cases where the IRS identifies a possible tax deficiency,
the agency will provide in the first letter to taxpayers a
detailed description of the examination, appeals and
collection process. The letter also will detail the
assistance available from the National Taxpayer Advocate.
Previous | Next
1999 IRS News Releases | News Releases Main | Home