IRS Commissioner, to PR Guy: I want to make sure the taxpayers know that the IRS can collect every penny you owe in taxes, including interest and penalties, every cent of it!
PR Guy: But that sounds pretty negative. It won't come off well for us...
IRS Commissioner: How about, "The good news is the IRS can't collect more than you owe."
PR Guy: I don't know. I think taxpayers will see right through it.
IRS Commissioner: Make it happen!
According to the IRS, this means "Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly." That sounds great! But, what is "the amount of tax legally due?" Under the law, when the IRS assesses a tax, that becomes tax legally due. That amount grows with interest and penalties, and you have to pay those, too, because they are also legally due. Then, what does it mean to "apply all tax payments properly?" Under well-established law, unless you specifically direct a tax payment you make to a specific tax year, the IRS can properly apply that payment to any of your tax liabilities for any year as the IRS sees fit. So, this "right" amounts to this: "The IRS can collect all the taxes, penalties, and interest you owe until they are fully paid, and the IRS will apply your payments to your taxes, but will do so in a manner fits its own best interest in most cases."
Ultimately, there should be one item in the Taxpayer Bill of Rights, bolded for emphasis: You have the right to not blindly trust the IRS to act in your best interest. Put that on a poster and slap it on the IRS walls.
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