On 6/20/24, the IRS issued Tax Tip 2024-59 to alert taxpayers that mediation with the IRS can assist taxpayers to solve their tax issues early and effectively. IRS states that mediation with the IRS can be a more collaborative and cost-effective approach to case resolution. Mediation is also known as Alternative Dispute Resolution and on 4/24/24, the IRS announced the formation of a new Alternative Dispute Resolution Program Management Office – an office that will collaborate with the IRS Business Operating Divisions to help taxpayers resolve tax disputes earlier and more efficiently. IRS Commissioner Daniel Werfel stated: “We’re committed to providing taxpayers who wish to resolve their issues without litigation a choice of early resolution options, and the Alternative Dispute Resolution Program Management Office will ensure taxpayers are aware of those options.” The IRS tax tip states that the traditional appeal process is still available for taxpayers who choose it. That said, it is important to note that mediation with the IRS may provide a chance to avoid a lengthy appeal process or costly litigation. Taxpayers that have representation from a qualified tax expert stand the best chance of having successful mediation with the IRS and reduce their risk and cost when settling their tax issues.
Mediation with the IRS may be right for a taxpayer if a taxpayer:
- Wants to resolve the dispute at the earliest possible stage of their audit.
- Doesn’t have many disputed issues.
- Gave the IRS information to support their position.
- Case is still being considered by the IRS and issues remain unresolved.
Mediation with the IRS is:
- Voluntary for both parties.
- Nonbinding, each party retains 100% control over whether to settle the case. No one can force either party to do something they don’t agree to do.
- Effective when both parties have a desire to resolve the disputed issue.
- Appropriate when all issues are fully resolved except the issue for which mediation is requested.
- A chance to avoid a lengthy appeal process or costly litigation.
Mediation with the IRS is NOT:
- Required by either party.
- A replacement for the audit or collection process.
- A process in which the parties in the dispute offer arguments directly to the mediator hoping to “win.”
- Effective if either party believes the only way the dispute will get resolved is if the other party concedes or gives up on its position.
- A time to present new information or raise new issues.
- An opportunity to try and get a more favorable outcome or delay the examination or collection process.
IRS states that Mediation doesn’t work for anybody unless it works for everybody. Each party has an incentive to find a solution that meets the needs of the other party
IRS encourages participants that want to mediate to follow these principles:
- Decision-makers must be present.
- Participants should have a sincere desire to resolve the dispute, not just want it to go away.
- It is important for each party to know and understand – but not necessarily agree with – the other party’s concerns.
- Participants must be open to new ideas for resolution.
- Parties should weigh the prospects of continued appeal and litigation costs realistically.
Do you have a tax issue with the IRS? Have you asked your tax expert about different IRS programs, such as Fast Track Settlement, Fast Track Mediation, Rapid Appeals Process and Post-Appeals Mediation?
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