Giving Taxpayer Rights a Seat at the Table

Abstract

How can Congress’ codifying the taxpayer bill of rights make a meaningful difference for tax administration? This is a question that will likely confront academics, policymakers and judges in the next few years. In late 2015, Congress codified the rights that the Internal Revenue Service administratively adopted in 2014, explicitly requiring that the Commissioner ensure that IRS employees receive training and act in accord with them. A recent article by Professors Alice Abreu and Richard Greenstein refers to the codification of TBOR having the power to “transform the tax practice and the relationship between taxpayers and the IRS.” Yet the statute itself is silent on the practical effect of IRS violations of any of the rights and fails to include a specific remedy or enforcement mechanism when the IRS acts inconsistently with or violates those rights. In Facebook v IRS, a federal district court concluded that at least with respect to one of the enumerated taxpayer rights (the right to appeal a decision in an independent forum), the right is not enforceable by taxpayers. This development highlights a central weakness in the current law, namely that there is no formal way to ensure that IRS employees act consistently with or even consider taxpayer rights. In this essay I propose a way to change this shortcoming. I argue that we should focus on rulemaking as a way to operationalize taxpayer rights. Congress should explicitly require the IRS to consider the impact of guidance on taxpayer rights prior to promulgating regulations and other guidance. In so doing, Congress should rely on and expand the role of the office within the IRS that is deeply associated with the increased importance of taxpayer rights, the Taxpayer Advocate Service (TAS).