17.1 IRS organizational structure and taxpayer rights

The IRS, a bureau within the Treasury Department, enforces tax laws through various divisions. From individual taxpayers to large corporations, each division handles specific segments. Support functions like Appeals and Criminal Investigation ensure smooth operations and compliance.

Taxpayer rights are fundamental to the IRS's mission. The Taxpayer Bill of Rights outlines ten essential protections, including the right to be informed and to challenge IRS decisions. The Taxpayer Advocate Service offers independent assistance for complex issues or unresolved problems.

IRS Organization and Divisions

Organizational Structure and Leadership

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• IRS operates as a bureau within the Department of the Treasury, enforcing U.S. tax laws
• Commissioner of Internal Revenue heads the IRS
  • Appointed by the President and confirmed by the Senate
  • Serves a five-year term

Primary Operating Divisions

• Wage and Investment Division handles individual taxpayers
• Small Business/Self-Employed Division focuses on small businesses and self-employed individuals
• Large Business and International Division oversees large corporations and international tax matters
• Tax Exempt and Government Entities Division manages tax-exempt organizations and government entities

Support Functions and Taxpayer Services

• Functional units support IRS operations
  • Appeals unit handles tax disputes
  • Criminal Investigation division investigates tax fraud
  • Office of Chief Counsel provides legal guidance
• Modernized e-File (MeF) system processes electronic tax returns efficiently
• Service centers and taxpayer assistance centers provide direct support nationwide
• Compliance programs ensure adherence to tax laws
  • Audits examine tax returns for accuracy
  • Collections pursue unpaid taxes
  • Criminal investigations target tax evasion and fraud

Taxpayer Rights and Protections

Fundamental Rights Under the Taxpayer Bill of Rights

• Adopted by IRS in 2014, outlines ten essential taxpayer rights
• Right to be informed about tax laws and IRS procedures
• Right to quality service ensures prompt and professional assistance
• Right to pay only the correct amount of tax, including interest and penalties
• Right to challenge IRS positions and provide additional documentation
• Right to appeal IRS decisions in an independent forum (within IRS or courts)

Privacy and Finality Rights

• Right to privacy limits IRS information gathering and enforcement actions
• Right to finality provides information on time limits
  • Maximum time for taxpayers to challenge IRS positions
  • Maximum time for IRS to audit a tax year or collect tax debt

Taxpayer Advocate Service Role

TAS Function and Assistance

• Independent organization within IRS providing free assistance to taxpayers
• Resolves issues not settled through normal IRS channels
• Offers personalized service for complex tax problems
• National Taxpayer Advocate reports to Congress on systemic issues
  • Recommends administrative and legislative changes
• Advocates for taxpayer rights and improves IRS services

Eligibility and Programs

• Assists taxpayers facing immediate financial harm
• Helps when IRS delays exceed 30 days or miss promised response dates
• Provides education and outreach programs on taxpayer rights and responsibilities
• Administers Low Income Taxpayer Clinic (LITC) program
  • Offers free or low-cost representation for low-income taxpayers in IRS disputes

Filing for Refund or Credit

Claim Filing Process

• Use Form 1040X for individual income taxes
• Use Form 1120X for corporate income taxes
• File within statute of limitations
  • Generally three years from original return filing date
  • Or two years from tax payment date, whichever is later
• Provide detailed explanation for refund claim
  • Include changes to income, deductions, or credits
• Submit supporting documentation (corrected information returns, receipts)

Claim Processing and Appeals

• IRS typically processes claims within 16 weeks
  • Complex cases may require additional time
• Taxpayers can appeal denied claims within IRS
• Option to file lawsuit in federal court if claim denied
• Interest may be paid on refunds not issued within 45 days
  • Counted from due date of return or accurate filing date, whichever is later