Business taxpayers. If you are in an individual business, the rights covered in this publication generally apply to you. If you are a member of a partnership or a shareholder in a small business corporation, special rules may apply to the examination of your partnership or corporation items. The examination of partnership items is discussed in Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund. The rights covered in this publication generally apply to exempt organizations and sponsors of employee plans.

AN APPEAL OF THE EXAMINATION FINDINGS

If you don't agree with the examiner's findings, you have the right to appeal them. During the examination process, you will be given information about your appeal rights. Publication 5, Appeal Rights and Preparation of Protests for Unagreed Cases, explains your appeal rights in detail and tells you exactly what to do if you want to appeal.

Appeals Office. You can appeal the findings of an examination within the IRS through our Appeals Office. Most differences can be settled through this appeals system without expensive and timeconsuming court trials. If the matter cannot be settled to your satisfaction in Appeals, you can take your case to court.

Appeals to the courts. Depending on whether you first pay the disputed tax, you can take your case to the U.S. Tax Court, the U.S. Claims Court, or your U.S. District Court. These courts are entirely independent of the IRS. As always, you can represent yourself or have someone admitted to practice before the court represent you.

If you disagree about whether you owe additional tax, you generally have the right to take your case to the U.S. Tax Court if you have not yet paid the tax. Ordinarily, you have 90 days from the time we mail you a formal notice (called a "notice of deficiency") telling you that you owe additional tax, to file a petition with the U.S. Tax Court. You can request simplified small tax case procedures if your case is $10,000 or less for any period or year. A case settled under these procedures cannot be appealed.

If you have already paid the disputed tax in full, you may file a claim for refund. If we disallow the claim or do not take action within 6 months, then you may take your case to the U.S. Claims Court or your U.S. District Court.

The amount of tax withheld from your wages is determined by the W-4, Employees Withholding Allowance Certificate, you give your employer. If your certificate is incorrect, the IRS may instruct your employer to increase the amount. We may also assess a penalty. You have the right to appeal the decision. Or, you can file a claim for refund and go to the U.S. Claims Court or U.S. District Court.

Recovering litigation expenses. If the court agrees with you on most issues in your case, and finds that our position was largely unjustified, you may be able to recover some of your administrative and litigation costs. To do this, you must have used all the administrative remedies available to you within the IRS. This includes going through our Appeals system and giving us all the information necessary to resolve the case.

Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, will help you more fully understand your appeal rights.

FAIR COLLECTION OF TAX

Whenever you owe tax, we will send you a bill describing the tax and stating the amounts you owe in tax, interest, and penalties. Be sure to check any bill you receive to make sure it is correct. You have the right to have your bill adjusted if it is incorrect, so you should let us know about an incorrect bill right away.

If we tell you that you owe tax because of a math or clerical error on your return, you have the right to ask us to send you a formal notice (a "notice of deficiency") so that you can dispute the tax, as discussed earlier. You do not have to pay the additional tax at the same time that you ask us for the formal notice, if you ask for it within 60 days of the time we tell you of the error.

If the tax is correct, we will give you a specific period of time to pay the bill in full. If you pay the bill within the time allowed, we will not have to take any further action.

We may request that you attend an interview for the collection of tax. You will receive an explanation of your rights and of the collection process either before or at the interview.

Your rights are further protected because we are not allowed to use tax enforcement results to evaluate our employees.

Payment arrangements. You should make every effort to pay your bill in full. If you can't, you should pay as much as you can and contact us right away. We may ask you for a complete financial statement to determine how you can pay the amount due. Based on your financial condition, you may qualify for an installment agreement. We can arrange for these payments to be made through payroll deductions. We will give you copies of all agreements you make with us.

If we approve a payment agreement, the agreement will stay in effect only if:

You give correct and complete financial information,

You pay each installment on time,

You satisfy other tax liabilities on time,

You provide current financial information when asked, and
We determine that collecting the tax is not at risk.

Following a review of your current finances, we may change your payment agreement. We will notify you 30 days before any change to your payment agreement and tell you why we are making the change.

We will not take any enforcement action (such as recording a tax lien or levying on or seizing property), until after we have tried to

contact you and given you the chance to voluntarily pay any tax due. Therefore, it is very important for you to respond right away to our attempts to contact you (by mail, telephone, or personal visit). If you do not respond, we may have no choice but to begin enforcement.

Release of liens. If we have to place a lien on your property (to secure the amount of tax due), we must release the lien no later than 30 days after finding that you have paid the entire tax and certain charges, the assessment has become legally unenforceable, or we have accepted a bond to cover the tax and certain charges. Recovery of damages. If we knowingly or negligently fail to release a lien under the circumstances described above, and you suffer economic damages because of our failure, you can recover your actual economic damages and certain costs.

If we recklessly or intentionally fail to follow the laws and regulations for the collection of tax, you can recover actual economic damage and certain costs.

In each of the two situations above, damages and costs will be allowed within the following limits. You must exhaust all administrative remedies available to you. The damages will be reduced by the amount which you could have reasonably prevented. You must bring suit within 2 years of the action.

Incorrect lien. You have the right to appeal our filing of a Notice of Federal Tax Lien if you believe we filed the lien in error. If we agree, we will issue a certificate of release, including a statement that we filed the lien in error.

A lien is incorrect if:

You paid the entire amount due before we filed the lien,
The time to collect the tax expired before we filed the lien
We made a procedural error in a deficiency assessment, or
We assessed a tax in violation of the automatic stay provisions
in a bankruptcy case.

Levy. We will generally give you 30 days notice before we levy on any property. The notice may be given to you in person, mailed to you, or left at your home or workplace. On the day you attend a collection interview because of a summons, we cannot levy your property unless the collection of tax is in jeopardy.

Property that is exempt from levy. If we must seize your property, you have the legal right to keep:

Necessary clothing and schoolbooks,

A limited amount of personal belongings, furniture, and business or professional books and tools,

Unemployment and job training benefits, workers' compensation, welfare, certain disability payments, and certain pension benefits,

The income you need to pay court-ordered child support,

Mail,

An amount of weekly income equal to your standard deduction
and allowable personal exemptions, divided by 52, and
Your main home, unless collection of tax is in jeopardy or the
district director (or assistant) approves the levy in writing.

If your bank account is levied after June 30, 1989, the bank will hold your account up to the amount of the levy for 21 days. This gives you time to settle any disputes concerning ownership of the funds in the account.

We generally must release a levy issued after June 30, 1989, if: You pay the tax, penalty, and interest for which the levy was made,

The IRS determines the release will help collect the tax,

You have an approved installment agreement for the tax on the levy,

The IRS determines the levy is creating an economic hardship,

or

The fair market value of the property exceeds the amount of the levy and release would not hinder the collection of tax.

If at any time during the collection process you do not agree with the collection officer, you can discuss your case with his or her supervisor.

If we seize your property, you have the right to request that it be sold within 60 days after your request. You can request a time period greater than 60 days. We will comply with your request unless it is not in the best interest of the government.

Access to your private premises. A court order is not generally needed for a collection officer to seize your property. However, you don't have to allow the employee access to your private premises, such as your home or the nonpublic areas of your business, if the employee does not have court authorization to be there.

Withheld taxes. If we believe that you were responsible for seeing that a corporation paid us income and social security taxes withheld from its employees, and the taxes were not paid, we may look to you to pay an amount based on the unpaid taxes. If you feel that you don't owe this, you have the right to discuss the case with the collection officer's supervisor. You may also request an appeals hearing within 30 days of our proposed assessment of employment taxes. You generally have the same IRS appeal rights as other taxpayers. Because the U.S. Tax Court has no jurisdiction in this situation, you must pay at least part of the withheld taxes and file a claim for refund in order to take the matter to the U.S. District Court or U.S. Claims Court.

The amount of tax withheld from your wages is determined by the W-4, Employees Withholding Allowance Certificate, you give your employer. If your certificate is incorrect, the IRS may instruct your employer to increase the amount. We may also assess a penalty. You have the right to appeal the decision. Or, you can file a claim for refund and go to the U.S. Claims Court or U.S. District Court.