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What is the Taxpayer Bill Of Rights (TABOR)?
The Taxpayer Bill of Rights (TABOR) is a broad term encompassing many concepts and initiatives at the federal, state and local levels of the United States and some other countries.
Specifically, it may refer to a law passed by Congress in 1988 and amended in 1996 that specifies how the IRS must handle appeals and liens related to challenges by taxpayers. TABOR may also refer to ballot initiatives designed to limit the government’s power of taxation. Finally, TABOR can refer to a charter adopted by the U.S. Internal Revenue Service (IRS) in 2014 that spells out the rights of American taxpayers.
Key Takeaways
- The Taxpayer Bill of Rights (TABOR) can refer to many different ideas and policies related to tax collection and payment.
- At a local level, TABOR typically refers to initiatives to limit the ability of governments to assess and collect taxes.
- At the federal level, TABOR refers to various legislation passed by Congress aimed at giving taxpayers certain rights in their interactions with the IRS.
- The IRS also has its own document titled the “Taxpayer Bill of Rights,” which is a charter that compiles in one place the various rights of taxpayers.
Understanding TABOR at Local Level
At a local level, TABOR can refer to various referendums seeking to limit the powers of government to assess and collect taxes. These were first promoted by conservative and libertarian groups in the 1980s. TABOR in this context was not actually a charter of rights, but a type of measure that sought to cap tax revenue by metrics such as inflation and population growth. Colorado voters passed a version of the measure in 1992. TABOR referendums in Maine, Nebraska, and Oregon failed to pass, and TABOR laws exist in no other states, although they do appear in some counties and cities.
TABOR as Passed by Congress
At the federal level, TABOR refers to a bill by Congress in 1988. Now called TABOR II following additional amendment passed in 1996, the legislation does not address tax rates or increases. Rather it’s aimed at ensuring fair treatment of taxpayers during audits and assessments. For example, the law gives taxpayers up to 21 days to meet payment demands without incurring interest, depending on the amount owed. It restricts the tax agency’s ability to impose property liens. And it requires the IRS to prove its case against a taxpayer, or refund the taxpayer for attorney’s fees, among many other requirements.
TABOR in the IRS Code
The 2014 Taxpayer Bill of Rights in the Internal Revenue Code is just that: a charter of ten broad rights of taxpayers. These rights were not new in 2014; TABOR simply gathered various rights that were already in the U.S. tax code and presented them in one document. The initiative was the result of work by the agency’s independent National Taxpayer Advocate, Nina Olson, in response to concerns that the IRS had grown unresponsive to taxpayers. Given that the rights already existed in the tax code, many viewed the IRS TABOR as a reaffirmation, seeking:
- The right to be informed
- The right to quality service
- The right to pay no more than the correct amount of tax
- The right to challenge the IRS’s position and to be heard
- The right to appeal an IRS decision in an independent forum
- The right to finality
- The right to privacy
- The right to confidentiality
- The right to retain representation
- The right to a fair and just tax system
What Is the TABOR Law in Colorado?
Colorado is the only state that has approved a TABOR measure that places limits on the raising and spending of tax revenue. Under its measure, passed in 1992, state and local governments require voter approval to raise certain tax rates. In addition, if revenue collected under current tax rates grows faster than the rates of inflation and population growth, any surplus is returned to taxpayers as a refund.
Do You Have to Pay Taxes on the TABOR Refund in Colorado?
The IRS said that refunds from TABOR will not be taxed for the 2023 tax year, though such a decision does not preclude the possibility that the agency may treat the mechanism differently in the future.
How Much Is TABOR Refund Worth?
For the 2023 tax year, Colorado residents will receive $800 per filer due to TABOR. The tptal tax revenue surplus for the state was $3.7 billion.
The Bottom Line
The Taxpayer Bill of Rights is a broad term that can refer to a range of concepts and policies related to tax collection and payment. For localities and states, TABOR, as it’s known in brief, usually refers to initiatives that propose to limit government’s ability raise taxes. Federally, the term refers to various legislation that provide taxpayers certain rights during the course of audits and tax assessments. The IRS also has a charter of ten broad taxpayer rights, which is titled the “Taxpayer Bill of Rights.”