While our system of federal taxation may seem burdensome, taxpayers do have many rights when it comes to the process. The IRS does want taxpayers to be informed about their rights so that they can protect themselves.

There are many rights for taxpayers at all steps of the tax process, but here are some of the most common rights that you should be aware of:

• Your civil rights are protected, and that means that no employee of the IRS can discriminate against you based upon your race, sex, age or disability.
• You have a right to receive notices related to your tax matters. The IRS must notify you if they claim you owe more or less taxes, and they must give you the reason why you owe more or less. They also must provide you details of interest and penalties that are assessed.
• You have a right to be represented in your tax matters. You can be represented by an attorney, an accountant, a family member, or other person of your choosing.
• You have a right of confidentiality, both within the IRS and outside of the IRS. No IRS employee can release information about your tax situation to anyone but you, unless you have signed a power-of-attorney form. Also, employees of the IRS are not allowed to arbitrarily access your tax records. They must only access them for official business.
• You have certain procedural rights when it comes to collecting your taxes. These rights include a timetable for collecting taxes, as well as certain methods for collecting taxes, which might include garnishing wages or levying bank accounts.
  

Along with rights come responsibilities, however. Taxpayers are responsible for filing accurate taxes on time, and for paying the taxes, interest, and penalties due. The IRS provides a Taxpayer Advocate Service which is there to take your complaints and help you resolve your problems with the IRS.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

How would you feel about the IRS if they apologized to you and sent you money to make up for all your troubles?

Plenty of people I know would love it! They've been battered by the IRS, sometimes not because of their own errors. Other times, they have made mistakes but the IRS made it incredibly difficult to correct the problems, even when the right documentation and explanation was offered up. I've worked with some really nice, competent and efficient employees of the IRS. But there are times when I end up feeling terribly burdened by an undereducated employee or one who has much pent up anger.

In the National Taxpayer Advocate's 2007 Annual Report to Congress, a suggestion is made that the Congress should authorize the IRS to give money to taxpayers when "... the action or inaction of the IRS has caused excessive expense or undue burden to the taxpayer, and the taxpayer meets the IRC § 7811 definition of significant hardship."

It is suggested that taxpayers should be eligible to receive between $100 and $1,000 if they fall under these guidelines. And the key? These payments would not be taxable!!!! Hooray. I doubt this will ever happen, but the more I think about it, the more I believe it's a really good idea!

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.