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The Tax Practice of IIT Chicago-Kent College of Law
The Tax Practice of IIT Chicago-Kent College of Law


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# 7 - Test Your IRS Knowledge: A Short Quiz

Posted on in Tax Rants

This rant is a little different, a True-False quiz to test your knowledge and perceptions of the Internal Revenue Service:

1. The IRS is an unresponsive, bloated bureaucracy that often treats similarly-situated taxpayers differently. True or False?

Historically, one of the absolutely legitimate complaints leveled against the IRS was its inability to internally coordinate discretionary decision-making, with the result that specific agency employees across the country would deal with similarly-situated taxpayers in radically divergent ways, resulting in not only the appearance, but a reality, of arbitrary and even discriminatory determinations.

In fact, this was one of the major conclusions reached by the consulting firm hired to examine the various allegations made against the IRS after the famed senate hearings of 1997 and 1998, which ultimately led to the restructuring of the IRS and the significant (third) Taxpayer Bill of Rights legislation passed by Congress in 1998.

But have things changed? In my opinion, not too much. Examiners proposing adjustments to tax returns, Revenue Officers considering which assets to levy, Appeals Officers attempting to resolve disputes without litigation, and Chief Counsel attorneys trying cases in the U.S Tax Court all seem to lack a consistent approach to handling taxpayers who fail to concede their positions. Much is left to subjective determinations and individual judgements which may or may not be exercised in an even-handed, objectively similar manner.


2. The United States tax system is one of "voluntary compliance". True or False?


Sounds familiar, right? Our system is different than most every other tax collection process in the world because it is one of "voluntary compliance". But - if you work as a salaried employee, your employer is required to withhold income taxes from your paychecks. If you fail to file required federal income tax returns, the IRS will prepare "Substitute For Returns" for you, then collect the balances due by seizing your bank account or garnishing your wages. Taxpayers who have attempted to "opt out" of the system, even to the point of relinquishing their U.S. citizenship, have been criminally prosecuted for refusing to pay their income taxes. Does that sound like a voluntary system? It aint.


3. The IRS has extraordinary enforcement powers, and can administratively take your property to satisfy taxes owing, without any external, judicial intervention.

True or False?

The myth of the all-powerful IRS is based on some very real, extraordinary enforcement capacities, granted to the agency by Congress, and distinguishing it from any other creditor in the United States. For example, the IRS can send you a bunch of letters and, if you fail to respond, the agency can send out a goon to drive away your Mustang to satisfy the tax debt owing. Moreover, the IRS can force you to come into its office and submit to a question and answer whereby you have to disclose all sources of income and all assets. Can Citibank Visa do that if you miss your minimum credit card payments? Not without a court order.

Since 1998, when Congress passed legislation providing for a Collection Due Process hearing, taxpayers have had the ability to stop the IRS collection machine if they timely file a request in response to a certain letter issued by the IRS. Doing so may ultimately allow you to plead your case before the Tax Court, though your true ability to actually alter the IRS conduct is very limited (more on this in a future Tax Rant). And if you miss this thirty-day window of time for filing the comes Repo Man.


4. A taxpayer can go to jail for not paying his taxes. True or False?


Easy, right? But it doesn’t really happen that often. Not unless you are a politician, a celebrity, a tax protestor, or some combination of these (Wesley?) More likely, the IRS will just go after taxpayers civilly, though the oppressive interest and penalties added can feel like debtor's prison to many.


5. A taxpayer can go to Tax Court and fight the IRS without hiring a lawyer.

True or False?

Sure, you can try your own case in Tax Court pro se. In fact, the Tax Court has undertaken great efforts to demystify the process by including a video and other excellent resources on its website ( to educate taxpayers who want to proceed without an attorney, and to facilitate the process for them. But, and paraphrasing Chris Rock, just because you can do it, doesn’t necessarily mean you should do it. For some good reasons why taxpayers might want to consider hiring an attorney with specialized knowledge of the Tax Court and tax controversy procedures before litigating against the IRS, see my Tax Rant # 6 ("Why Do Taxpayers Lose Most Every Case Against the IRS?")


How did you do?



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