Tax Protester? IRS Has a Special Code For You
It has come to light through recent audits of the Internal Revenue Service (IRS) by the Treasury Inspector General for Tax Administration (TIGTA), that the IRS is utilizing an internal coding of an “Illegal Tax Protester” or “Constitutionally Challenged” to identify a taxpayer as such if they feel the label is warranted. This coding designation stays in the taxpayers account or records, and could possibly lead to future IRS employee bias.
TIGTA explains that based on Section 3707 of the IRS Restructuring and Reform Act of 1998, the IRS is prohibited from labeling taxpayers as Illegal Tax Protesters or any similar designation. After a recent audit found this action still taking place within the IRS, TIGTA stated that “using Illegal Tax Protester or other similar designations may stigmatize taxpayers and may cause employee bias in future contacts with these taxpayers”.
TIGTA and the IRS are currently at odds with this issue. The IRS is taking the position that using this designation in a taxpayer account does not interfere with the Section 3707 provision, but TIGTA disagrees.
We have seen this affect some of our clients first hand, as some may have been a “Tax Protester” long ago and are currently trying to step into compliance and resolve their tax issues going forward, but they find great resistance in doing so because of this label attached to them internally within the IRS. Seems a little unfair when most tax protesters are misled on bad advice, and once the realization sets in, it is often too late to remove the stigma. The IRS agents involved are also less apt to treat a protester fairly, and/or afford them their rights.
Don’t fall into this category of “Tax Protester”, and research any tax advice that sounds too good to be true.
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