The Internal Revenue Service on Thursday invited public input on improvements to certain post-filing alternative dispute resolution (ADR) programs currently offered to taxpayers.
“The IRS is greatly interested in examining ways to help to reduce the time, costs and administrative burden for taxpayers and the government in resolving tax disputes,” said Andy Keyso, Chief of the Independent Office of Appeals. “We’re open to all suggestions about how to better use ADR techniques to help expedite their fair resolution.”
The IRS is committed to resolving disputes with taxpayers without a costly legal process whenever possible. The Inflation Reduction Act Strategic Operating Plan (initiative 2.4) emphasizes improvements to tax certainty programs that help taxpayers resolve compliance issues quickly and with finality.
Available ADR programs
ADR programs can be important tools for resolving tax disputes efficiently without litigation in a way that is fair and impartial to taxpayers and the government.
Over the past two decades, the IRS has offered four principal post-filing ADR programs:
- Fast Track Settlement (FTS) – available to taxpayers under audit and in the jurisdiction of Large Business & International (LB&I), Small Business and Self Employed (SB/SE), or Tax Exempt and Government Entities Division (TEGE). Under FTS, an independent Appeals mediator assists the taxpayer and the IRS to try to reach an agreement on disputed issues, facilitating settlement discussions and offering settlement proposals.
- Fast Track Mediation – Collection (FTMC) – available for certain collection cases and issues to help taxpayers resolve disputes resulting from Offers in Compromise and Trust Fund Recovery Penalties. Collection Due Process cases and cases worked at a Collection Campus site are some of the cases excluded from FTMC. Under FTMC, an independent Appeals mediator assists the taxpayer and the IRS to try to reach an agreement on disputed issues.
- Rapid Appeals Process (RAP) – available to most LB&I cases or SB/SE estate and gift cases. It consists of a pre-Appeals conference in which IRS Appeals utilizes mediation techniques to try to resolve unagreed issues while the case is in Appeals’ jurisdiction. RAP enables taxpayers and Exam to work together to expedite the resolution of unagreed issues in Appeals and is meant to be completed in one conference.
- Post Appeals Mediation (PAM) – available if IRS Appeals settlement discussions are unsuccessful and the remaining disputed issues are fully developed. Cases for which tax disputes have been previously mediated through a different ADR program, such as through FTS, are ineligible for PAM. PAM is available to resolve disputed tax issues that originate from an IRS audit or to resolve disputed tax issues that originate through IRS tax collection actions.
The IRS is interested in suggestions to improve the administration of these ADR programs and in proposals for other approaches to ADR that can increase the use and efficacy of ADR in the resolution of tax disputes.
Public input sought on ADR programs
The IRS welcomes comments on all aspects of alternative dispute resolutions practices to help inform IRS policies for improving taxpayer service and resolving issues and cases fairly and expeditiously.
The IRS particularly welcomes thoughts on:
- Reasons taxpayers choose not to use these ADR programs (e.g., Fast Track Settlement – see LB&I FTS, SB/SE Examination FTS, and TEGE FTS; Fast Track Mediation – Collection; Rapid Appeals Process – see RAP; and Post Appeals Mediation – see PAM), and potential modifications to these programs that can remedy taxpayer concerns.
- Issues that are currently excluded from these ADR programs that should not be excluded.
- Other ways in which these ADR programs could be improved.
- Suggestions for how best to educate taxpayers and representatives about these ADR programs.
- Experiences with the use of mediators from the IRS Independent Office of Appeals, and suggestions for how Appeals can ensure that mediators promote an ADR engagement that is conducive to settlement.
- Suggestions for how best to extend the use of these or other ADR programs to taxpayer segments that may be less aware of, or familiar with, ADR, such as small business and low-income taxpayers, and whether any unique characteristics of these segments necessitate modified ADR procedures.
- Feedback about experiences with the IRS when ADR programs were offered or not offered by IRS personnel or were denied when requested by taxpayers.
- Feedback about whether there are types of cases where ADR has proven particularly useful (e.g., valuation cases) and, if so, how ADR use can be increased in these types of cases.
- Ideas to achieve tax certainty or resolution sooner beyond these existing ADR programs, including ideas for new ADR programs.
All comments beyond the items listed above are welcome. Public comments can be sent to [email protected] by Aug. 25, 2023.
