Your sentence, "You are twisting his/her words" is not particularly respectful, polite, or neutral." It could be, I suppose, depending on the tone of voice the speaker uses, since HOW one says things can make all the difference in the world.
Generally, however, when you accuse someone of twisting someone else's words, you are leveling an accusation against them. In other words, you are rebuking them for not quoting someone accurately.
Paraphrasing what you heard (or read) a person say is OK, but your paraphrase needs to be at least fairly accurate. If it is not, then you could fairly be called out for twisting the person's words for your benefit, possibly unfairly and for your benefit.