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Rights? I Have Rights? What the Taxpayer Bill of Rights Means for Reducing Taxes

Updated: Nov 4, 2023

Lightbulb idea for reductin taxes

If you consider the Internal Revenue Service the meanest troll under the bridge, you might be surprised to learn that the IRS stands behind a Taxpayer Bill of Rights created to protect you and help with reducing taxes. The IRS introduced the Taxpayer Bill of Rights in June 2014, bringing together various guarantees and protections that had been scattered throughout the tax code. It offers a small amount of comfort and a substantial level of protection that you should be aware of as a taxpayer.

The Taxpayer Bill of Rights

  1. The right to be informed

  2. The right to quality service

  3. The right to pay no more than the correct amount of tax

  4. The right to challenge the IRS’s position and be heard

  5. The right to appeal an IRS decision in an independent forum

  6. The fight to finality

  7. The right to privacy

  8. The right to confidentiality

  9. The right to retain representation

  10. The right to a fair and just tax system

For more information, or if you want to cure insomnia by reading tax documents instead of counting sheep, you can gain exhaustive knowledge about these rights by accessing comprehensive IRS fact sheets here.

For those who want the two-minute takeaway about what these rights mean for you:

Plain Language is the IRS’s commitment to keeping taxpayers informed and providing high-quality service, which manifests itself in concise, readable publications and instructions. Today’s tax documents are much clearer and to the point than those of the past. To better serve taxpayers, they give concrete examples illustrating nuances of tax rules. I’ve been doing taxes since the days when we used pencils and adding machines, and I remember the obscurity of tax publications that you had to pick up at the library or receive in the mail. Twenty-five years later, I greatly appreciate the ability to find whatever information I need online, whenever I need it, in language I can understand.

Public information. That commitment to keeping taxpayers informed is crucial because it helps you make intelligent tax decisions for reducing taxes and avoiding penalties. You can easily search for explanations and get answers online if you don’t understand a tax rule. When tax laws change — or when the potential for change emerges — you can keep up with modifications and manage your finances accordingly.

Pay only what you owe. Tax evasion is a crime, but tax avoidance is perfectly legal — and smart. And the IRS explicitly supports this, as demonstrated by your rights to pay no more than the correct amount of tax and to a fair and just tax system. That’s why there is plenty of easily accessible information about how to legally minimize your tax bill. You’re not going to volunteer to pay $1.99 for a 99-cent value item, so why would you miss out on legally deducting your student loan interest?

Privacy and confidentiality. As much as any entity can promise in this era of data breaches, the IRS is committed to keeping your information private, secure, and confidential. The agency also affirms that its dealings with citizens will be “no more intrusive than necessary.” While it’s inherently somewhat invasive to give up your private financial information, at least the IRS promises to try to minimize the intrusion.

Making your voice heard. At a time when public comment and opinion have taken center stage, the IRS has tried to become more open to consumer needs. You can formally complain about IRS actions and expect the IRS to respond to those complaints. If answers aren’t forthcoming or if you disagree, you can appeal and expect a valid, fair response.

Will It Actually Work for Reducing Taxes?

As with all promised rights, sometimes the entity making the promises has trouble delivering. The IRS is no exception, in part due to budget cuts and changing regulations.

Nina Olson, the IRS’s national taxpayer advocate, cites a number of issues that make it harder for the IRS to meet its commitments in the bill of rights. She argues that the IRS is “failing badly” to meet taxpayer needs. Her concerns are echoed by Kelly Erb of Forbes, who writes that the “IRS can’t service taxpayers without resources. The most recent $850 million reduction in funding (a 7% cut since 2010) means that phones aren’t being answered, offices aren’t opened and taxpayers aren’t being served.”

If Congress doesn’t make the money available to enable IRS staff to publish information, accept and answer complaints, maintain privacy and security and provide service, the bill of rights will mean nothing.

Personally, paying taxes has never bothered me much. I don’t like them, but as Pop-pop said, “You’re only paying taxes if you earned some money.” When I pay taxes, I try to imagine my tax dollars doing positive things, like building a road to the beach or helping cover the cost of medicine for a sick child. I don’t expect taxpayers to love taxes just because we’ve got a bill of rights, but hopefully the next time there’s a problem, one of these 10 commitments from the IRS will help save the day.

Kathryn Hauer, a Certified Financial Planner ™, adjunct professor, and financial literacy educator has written numerous articles and several books including the “11-Step, DIY, Comprehensive Financial Plan Workbook” and “Financial Advice for Blue Collar America.” She works to help clients and readers understand and act on complex financial information to keep them and their money safe. She functions as a strong advocate and guiding light for her clients as they move through murky and unfamiliar financial and career worlds. Read more on her website.

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