Ensuring a fair and transparent appeals process is essential for upholding taxpayer trust in the integrity of our voluntary tax system. The introduction of the Strengthen Taxpayer Rights Act of 2023 (H.R. 6332) by Representative Monica De La Cruz (R-TX), co-sponsored by Reps. Randy Weber (R-TX), Lance Gooden (R-TX), and Erin Houchin (R-IN), marks a significant step toward protecting taxpayers from unwanted IRS participation in appeals meetings, thereby safeguarding their rights and promoting fairness. This effort aligns with the Right to Appeal an IRS Decision in an Independent Forum, one of the ten rights in the Taxpayer Bill of Rights.
The IRS Independent Office of Appeals plays a crucial role in the tax system by providing an impartial platform for taxpayers to contest IRS decisions. Established to ensure fairness and transparency, the Office of Appeals operates separately from IRS compliance and enforcement functions. This separation is designed to give taxpayers confidence that their cases will be reviewed without bias and based solely on the merits of their arguments.
The Strengthen Taxpayer Rights Act of 2023 focuses on a troubling recent development: the inclusion of IRS lawyers and compliance agents in taxpayer appeals conferences without the explicit consent of the taxpayer. Traditionally, these meetings involved direct engagement between the taxpayer and an IRS officer from the Independent Office of Appeals. While IRS lawyers and compliance experts could offer input beforehand through written opinions, their physical presence at these meetings was rare.
However, a 2016 revision of the Internal Revenue Manual allowed Appeals Officers to routinely include IRS lawyers and compliance personnel in appeals conferences, regardless of taxpayer consent. This change undermined the independence of the appeals process and transformed it into a more contentious and one-sided proceeding, contrary to Congress’s intent to ensure an independent appeals process.
The Strengthen Taxpayer Rights Act aims to restore balance by mandating taxpayer consent before IRS lawyers and compliance experts can participate in these crucial meetings. By doing so, it reaffirms the principle of fairness and ensures that taxpayers can present their cases without undue influence, thus upholding the integrity of the appeals process. This change has been recommended by the Office of the Taxpayer Advocate in its Objectives Report to Congress in 2024 and in previous years, highlighting the need to protect taxpayer rights and ensure a fair appeals process.
At the core of the Strengthen Taxpayer Rights Act is the commitment to maintaining an independent appeals process. By requiring explicit taxpayer consent for the attendance of IRS lawyers and compliance personnel, the bill ensures that the appeals process remains unbiased and transparent. Taxpayers can have confidence that their appeals are evaluated impartially and based solely on merit.
Prior to 2016, appeals conferences were characterized by collaborative efforts between taxpayers and Appeals Officers. These interactions were aimed at fostering dialogue, exploring mutual resolutions, and reaching fair settlements. The routine inclusion of IRS lawyers and compliance personnel disrupted this collaborative dynamic, often transforming discussions into adversarial proceedings. The Strengthen Taxpayer Rights Act seeks to reinstate a cooperative environment where taxpayers and Appeals Officers can work together to resolve disputes effectively.
Consent is fundamental to any equitable process. By requiring taxpayer consent before IRS personnel can participate in appeals conferences, the bill affirms the principle that taxpayers should have control over who is involved in discussions concerning their tax matters. This empowerment not only protects taxpayer rights, but also enhances trust in the fairness of the IRS appeals process.
Although the IRS had long operated an Office of Appeals under its administrative authority, Congress codified the office and retitled it the “Internal Revenue Service Independent Office of Appeals” as part of the Taxpayer First Act of 2019. This move was intended to reassure taxpayers of the independence of the appeals process.
The Strengthen Taxpayer Rights Act seeks to amend the Internal Revenue Code (IRC) § 7803(e) to guarantee taxpayers the right to an appeals conference without the presence of IRS lawyers or compliance personnel, unless the taxpayer specifically consents. This move is necessary to restore the integrity and independence of the appeals process and ensure that taxpayers rights are protected.
Rep. De La Cruz’s Strengthen Taxpayer Rights Act of 2023 represents a necessary and deliberate effort to fortify taxpayer rights and ensure a more equitable appeals process. By stipulating that IRS lawyers and compliance experts can only join meetings with the explicit consent of taxpayers, the bill strikes a crucial balance that helps shape a future for fairness between taxpayers and the IRS.