The Internal Revenue Service has added two new appeals programs for taxpayers who are disputing IRS actions.
The two programs, which offer post-appeals mediation and arbitration procedures for offer in compromise and trust fund recovery penalty cases, will be tested for two years in certain IRS offices beginning Dec. 1. The programs will be available at the appeals offices in Atlanta, Chicago, Cincinnati, Houston, Indianapolis, Louisville, Ky., Phoenix and San Francisco.
Under the two alternative dispute resolution programs, the taxpayer or the IRS appeals office may request nonbinding mediation. The taxpayer may decline the appeals office's request for mediation. The appeals office will evaluate a taxpayer's request for mediation based on criteria detailed in Revenue Procedure 2002-44 and Announcement 2008-111. A request for binding arbitration must be made jointly by the taxpayer and the appeals office. The mediation and arbitration procedures do not create any additional authority for settlement by the appeals office.
During the test period, appeals employees will advise the taxpayer of the availability of these alternative dispute strategies and the deadline for requesting such strategies. The post-appeals mediation process is available for both legal and factual issues. The mediator's role is to facilitate settlement negotiations so the parties can reach an agreement, but the mediator does not have settlement authority over any issue.
The arbitration procedure is available for factual issues only. The arbitrator's role is to hear both sides of a disputed issue and then render a decision based on the specific factual issue. The decision is binding on both parties. However, the arbitrator does not have the authority to decide that the offer in compromise itself must be accepted or that a person is or is not liable. Neither party may appeal the decision of the arbitrator or contest the decision in any judicial proceeding.
For more information, see Announcement 2008-111 in the Dec. 1 edition of the Internal Revenue Bulletin.
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