If you do not agree with the findings of an examiner with the Internal Revenue Service (IRS) following your tax audit, you are not alone. Efforts by the IRS to improve their alternative dispute resolution (ADR) offerings may be of interest.
In April of last year, the IRS announced the opening of its Alternative Dispute Resolution Program Management Office. The office was developed to rethink current resolution programs and create pilot programs to widen the options and reduce costs for taxpayers who do not agree with the IRS.
Initiatives for Taxpayers to Avoid IRS Audit Efforts
At the time, then-IRS Commissioner Danny 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 ADR programs offered by the IRS are designed to reduce costs and time to resolution and increase collaboration between taxpayers and the IRS. The primary ADR programs currently offered by the IRS include Appeals Mediation, Post-Appeals Mediation (PAM), and Fast Track Settlement (FTS).
In January of this year, the IRS announced an FTS pilot program through the Independent Office of Appeals (known as Appeals). This program will allow Appeals to facilitate disputes between the IRS and taxpayers while the matter is still under examination. Also introduced was a PAM pilot program which places a mediator in the mix between Appeals and the taxpayer to help the parties get to “yes.”
Tax Audit Help through Fast Track Settlement
Features of these new pilot programs include:
- FTS can now be offered on an issue-by-issue basis. In the past, taxpayers with complex matters that involved more than one issue might find themselves disqualified from FTS if one of their issues was ineligible for FTS. With the new program, FTS can be used for one or more issues, even if one issue for consideration is not eligible for FTS.
- Requests to participate in FTS or PAM cannot be denied without the approval of a first-line executive. This ensures oversight of the vetting of ADR requests.
- For taxpayers who are denied participation in an ADR program, an explanation will be provided for the denial—a move to increase transparency.
With additional pilot programs in development, the IRS is moving to increase ADR options and decrease the frustration of taxpayers and businesses looking to resolve differences instead of litigating them. To learn more about IRS audits, see our free eBook, A Tutorial on IRS Audits.
Expert Assistance When You Need It
From receiving an IRS tax audit letter to exploring ADR options, and if necessary, engaging in tax litigation—our tax lawyers are here to provide strong, experienced advice. For discreet and strategic representation, reach out to us at 440-250-9709 or schedule a consultation. We serve both domestic and international clients, with offices in Cleveland and Chicago ready to support you in resolving your tax matters efficiently.
