If you are concerned about a tax controversy or Internal Revenue Service (IRS) audit outcome, it could pay to understand Alternative Dispute Resolution (ADR) programs offered by the IRS.
The Fast Track Settlement (FTS) program began as a pilot program in 2021 to introduce dispute resolution methods to often contentious discussions between the IRS and taxpayers following an assessment or a tax bill. In April of last year, the IRS established its Alternative Dispute Resolution Program Management Office. At the time, the IRS reported that the use of its ADR programs was declining. To reverse that trend, the new office is revitalizing some of those ADR programs and, in January in of this year, the agency announced new ADR pilot programs.
IRS ADR Programs
Even with a history of ADR programs at the IRS, many taxpayers and businesses may not be aware of programs that may deter IRS tax collection enforcement or expensive tax litigation. The new pilots derive from two existing ADR programs, the FTS and Post-Appeals Mediation (PAM):
Fast Track Settlement (FTS): As the name implies, FTS, is intended to fast track settlement of matters in dispute between taxpayers and the IRS. This is a voluntary program that utilizes a mediator from the IRS Independent Office of Appeals (known as Appeals). This program is used for disputes following an IRS audit. Most importantly, taxpayers seeking to use the offer in compromise (OIC) option for overwhelming tax liability can take advantage of this avenue, as can business owners and others challenged by a trust fund recovery penalty regarding employment taxes. The aim is a more agile, less expensive, and faster process for resolving matters like:
- Disputes with individual taxpayers with international tax interests. There is no identified term of resolution.
- Businesses with international interests. The aim of the FTS program is dispute resolution within 120 days.
- For tax-exempt and government interests, FTS tries to resolve matters within 60 days.
- Individual taxpayers can use FTS for collection disagreements. The timeline to resolution is approximately 40 days.
- FTS aims to resolve conflicts for small businesses, individuals, and the self-employed within 60 days.
Post-appeals Mediation (PAM): During the PAM process, a mediator from Appeals works with you and your appeals agent to reach a resolution within 60 to 90 days. During this process, the parties work toward a resolution with the aid of a trained mediator and parties retain authority over any outcome. There are several matters where the PAM program would not apply, including OIC offers under consideration and matters already in litigation, among others.
Mediation can help taxpayers reduce risk, and litigation expenses—without losing control of outcomes. If you have questions concerning a tax controversy, speak with an experienced tax attorney for answers.
Strategic guidance on compliance and collection issues with the IRS
When you are involved in a tax controversy with the IRS, our legal team offers strategic guidance for recognizing and resolving challenges with the IRS. Set up a consultation or call us at 440-250-9709. We serve clients across the U.S. and internationally from our offices in Cleveland and Chicago.
For additional support, we invite you to explore our comprehensive guide, "Since You Asked: 15 Common and Concerning Tax Law Questions and Answers." In this guide, we delve into 15 frequently asked tax law questions, providing thorough answers to help you address immediate concerns and understand IRS practices better. This resource is an invaluable tool for anyone needing to navigate the complexities of tax law and understand when to seek qualified legal advice before engaging with the agency.
