Tax Tips for Entrepreneurs

Small Business Taxpayer Rights

Whether you know it or not, you are afforded certain rights in your dealings with the IRS. The IRS is tough, but here are some the rights you have as a small business taxpayer.

The threat of audits and other IRS actions can cause even the bravest small business taxpayers to tremble with fear.

Although they must operate in accordance with the tax code and federal laws, IRS agents can make your life a living hell, especially if you aren't prepared for your company to be examined under the lens of an IRS microscope.

Unfortunately, many small business taxpayers don't know that they are afforded certain rights under the same laws that empower the IRS. In fact, IRS agents are required to inform taxpayers about their rights and make every effort to protect those rights throughout the process. Although tax code enforcement can be intimidating, a working knowledge of your rights as a taxpayer will protect your company's interests and help you sleep a little more soundly.

  • Confidentiality. The IRS is required to maintain confidentiality in its dealings with taxpayers. Unless they are required to do so by law, the IRS is prohibited from disclosing any information you provide to outside parties. As a taxpayer, you must provide them with specific information – but they're required to tell you how it will be used and what the consequences will be if you fail to provide requested information.
  • Representation. Fortunately, you don't have to face the IRS alone. As a taxpayer, you have the right to obtain counsel and representation by individuals who are permitted to practice before the IRS. If you prefer, you can represent yourself. But most businesses hire attorneys, CPAs, or other agents to deal with the IRS on their behalf.
  • Review. The IRS is not allowed to unfairly target taxpayers for examination or review. On the other hand, an IRS audit doesn't necessarily mean that your return has been red-flagged. Examination procedures can occur randomly and are a normal part of IRS operating procedures. In many cases, reviews don't lead to additional tax payments or penalties.
  • Payment. Taxpayers are entitled to the possibility of making tax payments in installments. If you are unable to pay your entirely tax bill when you file a return, there are IRS procedures that allow you to enter into a payment agreement. You will be charged interest and penalties for late payment, and you are still required to file your return on time – but you may be able to extend the payment period.
  • Advocacy. The Taxpayer Advocate Service is an independent organization that falls under the IRS' organizational umbrella. It is designed to provide assistance to taxpayers who are experiencing problems with the IRS or believe that they are being treated unfairly. For more information about this service, visit the IRS website at or call 877-777-4778.

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