Due to the years of abuse and harassment suffered by taxpayers at the hand of unethical IRS agents, Congress enacted the Taxpayer Bill of Rights (TABOR), which restricts government growth and unnecessary tax increases. This reform consisted of three phases:

--          TABOR #1 went into effect in 1988. 

--          In 1996, President Bill Clinton signed TABOR #2. 

--          H.R. 2676, The Internal Revenue Service Restructuring and Reform Act, TABOR #3, passed in 1998.

TABOR affects each state in a variety of ways. One of the most memorable examples was in Colorado in 1992, when an amendment of Article X of the state’s constitution was passed, stating the only way a tax increase could enhance governmental revenues at a faster rate than the combined rate of population multiplication and inflation was if the measure won a majority vote. In addition, any growth of revenue that happened naturally and went beyond the allowed amount must be used for educational purposes or refunded to taxpayers once a sufficient reserve supply was instituted.

The ultimate outcome of enforcing this modification has led to lower tax revenue collection for the state. Eventually, Coloradans believed TABOR was working against the state, and they fought for an amendment. In November 2005, citizens voted to slacken some of the TABOR restrictions, one of which enabled the state to spend a sum not to exceed the highest total of the previous five years.   

The Internal Revenue Service has created a simplified overview of how taxpayers are protected under the law. This publication is available at the IRS Web site: www.irs.gov.