Question

The Internal Revenue Code (legislated by Congress) is the highest tax authority in the country. The Internal Revenue Service (IRS) enforces the tax laws. And if there is a disagreement between the taxpayer and the IRS, the matter may be litigated in court. Then you have tax professionals that represent taxpayers before the IRS. Tax professionals are bound by standards established by both the IRS and the American Institute of Certified Public Accountants (AICPA). Two questions: Do you think there are enough protections and resources for the taxpayer when dealing with the IRS? What surprised you the most about the tax practice environment?

Answer 1

The Internal Revenue Service(IRS) is a U.S. government agency responsible for the collection of taxes and enforcement of tax laws. Established in 1862 by President Abraham Lincoln, the agency operates under the authority of the United States Department of Treasury, and its primary purpose includes the collection of individual income taxes and employment taxes. The IRS also handles corporate, gift, excise, and estate taxes including mutual funds and dividends.

There are situations where a taxpayer can come into disagreement with the IRS. For this purpose, IRS created a separate branch of service called The Office of Appeals. Most of the employees here are auditors themselves, at one time, but are now senior employees in the IRS system, and they usually have legal or accounting experience. Their sole function is to review finished examination reports and provide an impartial platform for taxpayers to plead their cases to a higher power within the IRS. They attempt to avoid litigation by resolving tax disputes internally in a way that foments future voluntary taxpayer compliance with the tax laws.

From the point of view of taxpayer, in most cases eventhough there are resources available they don't win the case. Taxpayers represent themselves in court before the IRS. In most cases, the IRS wins, if the IRS suspects they will not prevail in court, they almost always settle the case before it goes before the court.The untold story is that very few cases make their way to the court system. Most IRS audits, collection agreements, and other matters are resolved administratively within the walls of the IRS. In rare circumstances, the IRS takes a few “winning” cases to court to use as compliance leverage with taxpayers. Some court disputes originate from taxpayers making a last stand against the IRS.Taxpayers although is provided by tax professionals but IRS always finds a way to oppress a legit complaint .In all, I would say that proper protection for the complaint is missing for taxpayers complaint rather than proper resources.

The fact that surprised me is that IRS has created everything on behalf of taxpayers only to uplift their credibilty in all ways and exploit taxpayers. And it also provides some benefits to tax payers so that they may not be felt exploited.With the above example eventhought the tax payer barely wins any case, IRS provides the benefit when an appeal is filed often IRS reduce (or even eliminate) previously assessed taxes and penaltie of the taxpayer.

In conclusion, I would say that taxpayer is not less of resources for their allegation but there is no protection for the allegation by the tax payer and the fact that surprised me is that IRS creates branches so that they can uplift their work oppress taxpayers in many ways.