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Would the newly adopted Taxpayer Bill of Rights have prevented the IRS Tea Party scandal?

The Internal Revenue Service today officially adopted a 10-point Taxpayer Bill of Rights. Too bad for the tax agency that it wasn't put in place sooner.

The National Taxpayer Advocate says that the document could have helped IRS employees avoid problems in their review of Tea Party and other organizations' applications for nonprofit tax status.

Taxpayer Bill of Rights graphic via Taxpayer Advocate Service

The rights, already guaranteed taxpayers but spread throughout the Internal Revenue Code (and IRS documents), are now conveniently encapsulated in the updated IRS Publication 1. It says all taxpayers have the right to:

  1. Be Informed,
  2. Quality Service,
  3. Pay No More than the Correct Amount of Tax,
  4. Challenge the IRS' Position and Be Heard,
  5. Appeal an IRS Decision in an Independent Forum,
  6. Finality,
  7. Privacy,
  8. Confidentiality,
  9. Retain Representation, and
  10. A Fair and Just Tax System.

IRS Commissioner John Koskinen and National Taxpayer Advocate Nina Olson jointly unveiled the official Taxpayer Bill of Rights. It's been one of Olson's goals for years.

Legislative protections went nowhere: Olson has tried to get Congress to pass legislation and last summer saw Capitol Hill take a small step that direction with the passage of H.R. 2768, the Taxpayer Bill of Rights Act of 2013. It would have put the provisions adopted today by the IRS into the Internal Revenue Code. The bill is stalled in the Senate.

Earlier this year, the House also passed by voice vote a pair of bills characterized as protections of taxpayer rights.

But the Protecting Taxpayers from Intrusive IRS Requests Act and the Taxpayer Transparency and Efficient Audit Act were specific responses by the Republican-controlled chamber to the IRS' proposed regulations to limit the political activity of nonprofit groups.

IRS problems with taxpayers, Congress: As you might recall, this legislative flurry goes back to May 2013. That's when we got word, awkwardly from still beleaguered former IRS executive Lois Lerner, that the agency's Exempt Organizations division focused a little too much on certain conservative groups seeking the favorable 501(c)(4) tax-exempt status.

Soon thereafter the Treasury Inspector General Report for Tax Administration (TIGTA) released its report finding that the IRS did indeed use inappropriate search criteria, specifically in connection with groups that had Tea Party or patriot in their names, in analyzing the requests.

It was subsequently revealed that more liberal, progressive groups also were targets of "be on the lookout," or BOLO, lists, but the Tea Party connection had already lit a fire under the partisan House.

Six Congressional investigations are continuing into the Tea Party application scandal and other IRS missteps.

Taxpayer and IRS protections? Some of the agency's problems, however, might not have occurred if it had taken taxpayer rights into consideration.

"IRS can use the bill of rights as a sanity check, a backstop to preempt any problems that occur," Olson said this afternoon in discussing the value that the new Taxpayer Bill of Rights can provide not only taxpayers but also the IRS.

Olson said that in looking at TIGTA's report on the IRS mishandling of 501(c)(4) requests, eight of the 10 taxpayer rights were violated. One example, she said, was that the applications "were held for a very long time not being told what the status of their application was," apparently in violation of the rights to be informed (#1) and finality (#6).  

If the IRS employees involved in that situation had the Taxpayer Bill of Rights in front of them and followed the dictates, the current controversy might not have happened.

Koskinen said that the ongoing Congressional inquiries into IRS operations were not a motivator in the decision to adopt the Taxpayer Bill of Rights. He acknowledged, however, that the document will help IRS staff as a single point of reference for taxpayers when there is an issue.

"It's a simple way for employees to have those rights before them if taxpayers have a problem during a process," he said. "It's not news to IRS employees, but it will make it easier for them in dealing with taxpayers as to what the taxpayers' rights are."

The document won't do the IRS any good in resolving its current problems with taxpayers and Congress, it just might forestall any future agency procedural problems.

And while that's not necessarily good news for Representatives and Senators wanting make political points with IRS-hating constituents, if the Taxpayers Bill of Rights works as envisioned it's definitely good news for the agency and all of us taxpayers.

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