All taxpayers have the right to a fair and just tax system. This is one of 10 rights in the Taxpayer Bill of Rights, which clearly outline the fundamental rights of every taxpayer.
Here’s what the IRS wants all taxpayers to know about the right to a fair and just tax system:
Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their tax liabilities, ability to pay or ability to provide information timely.
Taxpayers can receive assistance from the Taxpayer Advocate Service if they’re experiencing financial difficulty resolving their tax issues properly and timely through normal IRS channels. Taxpayers experiencing significant hardships because of IRS action or inaction may also be eligible for assistance from TAS.
Taxpayers who cannot pay their tax debt in full and meet certain conditions can arrange a payment plan with the IRS. This means the taxpayer will pay a set amount over time, generally monthly.
Taxpayers can submit an offer in compromise asking the IRS to settle their tax debt for less than the full amount if they:
Believe they don’t owe all or part of the tax debt
Are unable to pay all of the tax debt within the time permitted by law to collect
Have factors such as equity, hardship, or public policy they think the IRS should consider in determining whether to settle the liability
The IRS has a list of national and local guidelines covering the basic costs of living that it uses when considering a settlement offer reducing someone’s tax debt. IRS employees cannot use these guidelines if they would result in the taxpayer not having enough money to pay their basic living expenses. In these cases, the IRS will use the taxpayer’s actual expenses.
The IRS cannot seize all of someone’s wages to collect their unpaid tax. A portion is exempt from levy to allow the taxpayer to pay basic living expenses.
The IRS has the authority to decrease an excessive unpaid portion of any tax or liability assessed after the statutory period of limitations has expired or is erroneously or illegally assessed.
The IRS has the discretion to decrease interest on an underpayment when an IRS employee caused an unreasonable delay or error, and when no significant aspect of the error is attributed to the taxpayer.
Generally, income received in the form of tips is taxable. Here’s some information to help taxpayers correctly report the income they receive as a tip:
Use the Interactive Tax Assistant. The ITA tool is a tax-law resource that asks taxpayers a series of questions and provides a response based on the answers. Taxpayers can use Is My Tip Income Taxable?.
Show All Tips on a Tax Return. Use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to report the amount of any unreported tip income to include as additional wages. This includes the value of non-cash things someone receives as a tip, such as tickets or passes to an event.
Report All Types of Tips. Taxpayers must pay tax on all tips received during the year, including those:
Directly from customers.
Added to credit cards.
From a tip-splitting agreement with other employees.
Report Tips to an Employer. Employees who receive $20 or more in tips in any month must report their tips for that month to their employer by the 10th day of the next month, including cash, check and credit card tips received. The employer must withhold federal income, Social Security and Medicare taxes on the reported tips.
Keep a Daily Log of Tips. Use Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record tips. This will help report the correct amount of tips on a tax return.
Taxpayers who discover they made mistakes or omissions on their tax return can correct them by filing an amended tax return. Those who need to amend should remember these tips:
File using paper form. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct the tax return. Taxpayers can’t file amended returns electronically. They can obtain the form on IRS.gov/forms. Mail the Form 1040X to the address listed in the form’s instructions.
Amend to correct errors. File an amended tax return to correct errors or make changes to an original tax return; for example, taxpayers should amend to change their filing status or to correct their income, deductions or credits.
Don’t amend for math errors, missing forms. Taxpayers generally don’t need to file an amended return to correct math errors on their original return. The IRS will automatically correct these items. In addition, taxpayers don’t need to file an amended return if they forgot to attach tax forms, such as a Form W-2 or a schedule. The IRS will mail a request to the taxpayer, if needed.
File within three-year time limit. Taxpayers usually have three years from the date they filed the original tax return to file Form 1040X to claim a refund. Taxpayers can file it within two years from the date they paid the tax, if that date is later.
Use separate forms for each year. Taxpayers who are amending more than one tax return must file a Form 1040X for each tax year. They should mail each year’s Form 1040X in separate envelopes to avoid confusion. Taxpayers should check the box for the calendar year or enter the other calendar year or fiscal year they are amending. The form’s instructions have the mailing address for the amended return.
Attach other forms with changes. Taxpayers who use other IRS forms or schedules to make changes must attach them to the Form 1040X.
Wait to file for corrected refund for tax year 2017. Taxpayers who are due refunds from their original tax year 2017 return should wait to get it before filing Form 1040X to claim an additional refund. Amended returns may take up to 16 weeks to process.
Pay additional tax. Taxpayers who will owe more tax should file Form 1040X and pay the tax as soon as possible to avoid penalties and interest. They should consider using IRS Direct Pay to pay any tax directly from a checking or savings account at no cost.
Track amended return. Generally, taxpayers can track the status of their amended tax return three weeks after they file, using ‘Where’s My Amended Return?’ It’s available in English, Spanish, Chinese, Korean, Vietnamese and Russian. The tool can track the status of an amended return for the current year and up to three previous years. Taxpayers who have filed amended returns for multiple years can check each year, one at a time.
The 2018 National Small Business Week is April 29 through May 5. This is the perfect time for small business owners and the self-employed to check out many online products to help them understand their tax responsibilities.
Here are a few of the products in the spotlight for this year’s National Small Business Week:
Sharing Economy Tax Center. This web page provides fast answers to tax questions and links and forms about the sharing economy. People who are involved in the sharing economy are those who use online platforms to engage in businesses, such as renting a spare bedroom, providing car rides, and providing other goods and services.
Self-Employed Individuals Tax Center. The Self-Employed Individuals Tax Center is a great resource for sole proprietors and others who are in business for themselves. This site has many handy tips and references to tax rules a self-employed person may need to know. Self-employed taxpayers will find information on topics, including how to make quarterly payments and business structures.
During National Small Business Week – and any time of the year – small business owners can visit the IRS channel to watch a series of videos that can help them navigate tax topics that affect their business.
The small business playlist on the official IRS YouTube channel features several videos that might be short, but that pack in a lot of helpful information. The videos walk business owners through topics such as:
Estimated Taxes – covers who needs to make quarterly estimated tax payments and how people can make them.
Your Taxes in the Sharing Economy – reviews the tax responsibilities of people who participate in the gig economy, including people who use an app or website to rent out a spare room or offer rides in their car.
YouTube is just one social media website the IRS uses to share important information about taxes. Visit the Social Media page on IRS.gov to connect with the IRS through other sites and apps.