1999 Tax Help Archives  
Publication 553 1999 Tax Year

Chapter 7:
Taxpayer Rights

This is archived information that pertains only to the 1999 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Award of Administrative Costs

The rules were expanded for awarding reasonable administrative costs and certain fees incurred after January 18, 1999.

Qualified offer rule. You can receive reasonable costs and fees as a prevailing party in a civil action or proceeding when all the following occur.

  1. You make a qualified offer to the IRS to settle the case.
  2. The IRS rejects the offer.
  3. The tax liability (not including interest) later determined by the Court is not more than the amount of the qualified offer.

Note. The Court can consider the IRS not to be the prevailing party in a civil action or proceeding based on the fact that the IRS has lost in other courts of appeal on substantially similar issues.

Qualified offer. This is a written offer made by you during the qualified offer period. It must specify both of the following.

  • The amount of your liability (not including interest).
  • That it is a qualified offer when made.

It must also remain open until the earliest of the following dates.

  • The date the offer is rejected.
  • The date the trial begins.
  • 90 days from the date of the offer.

Qualified offer period. This is the period beginning with the date that the 30-day letter is mailed by the IRS to you and ending on the date that is 30 days before the date the case is first set for trial.

Time for awarding costs. Administrative costs can be awarded for costs incurred after the earliest of the following dates.

  • The date of the notice of deficiency.
  • The date the first letter of proposed deficiency is sent that allows you an opportunity to request administrative review in the Appeals Office of IRS.
  • The date you receive the Appeals Office of IRS decision.

Attorney fees. The basic rate of an award for attorney fees has increased from $110 to $125 ($140 for 2000) per hour and it can be higher in certain circumstances. Those circumstances now include the difficulty level of the issues in the case and the availability of tax expertise locally. The basic rate is subject to adjustment each year.

Attorney fees now include the fees you paid for the services of anyone who is authorized to practice before the Tax Court or before the IRS. In addition, attorney fees can be awarded in civil actions taken for unauthorized inspection or disclosure of your tax return or return information.

Fees can be awarded in excess of the actual amount charged if all the following apply.

  • The fees are charged at less than the $125 ($140 for 2000) basic rate.
  • You are represented for no fee, or for a nominal fee, as a pro bono service.
  • The award is paid to your representative or to the representative's employer.


Notice of IRS Contact of Third Parties

The IRS must notify you before they can contact third parties when examining or collecting your tax liability. Third parties may include your neighbors, banks, employees, or employers. The IRS must periodically, and upon your request, provide you with notice of specific contacts. This is effective for contacts made after January 18, 1999.

This provision does not apply in the following circumstances.

  1. When there is a pending criminal investigation.
  2. When providing notice would jeopardize collection of any tax liability.
  3. Where providing notice may result in reprisal against any person.
  4. When you authorized the contact.


Last Date for Filing Tax Court Petition

Beginning in 1999, each notice that the IRS mails to you must specify the last date on which you can timely file a petition with the Tax Court. This date is the 90th day (150th day if the address is outside of the United States) after the date that the notice of deficiency is mailed by the IRS.

For more information, see Tax Court under Appeal Rights in Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund.


Explanation of Claim for Refund Disallowance

Beginning January 19, 1999, the IRS must explain to you the specific reasons why your claim for refund is disallowed or partially disallowed. This puts into law an existing practice of the IRS.

Claims for refund can be disallowed based on a preliminary review or an examination by a revenue agent. This means you must receive one of the following.

  1. A form explaining that the claim is disallowed for one of the following reasons.
    • It was filed late.
    • It was based solely on the unconstitutionality of the revenue acts.
    • It was waived as part of a settlement.
    • It covered a tax year or issues that were part of a closing agreement or an offer in compromise.
    • It was related to a return closed by a final court order.
  2. A revenue agent's report explaining the reasons that the claim is disallowed.


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