As published in the Winter Park/Maitland Observer, Thursday Jan. 3, 2012 Edition Offers... Read More »
IRS Announces New Mediation Program for Offers in Compromise and Trust Fund Recovery Penalties
In IR-2008-135, issued on Dec. 1, 2008, the IRS announced its institution of a 2 year test of the post-Appeals mediation and arbitration procedures for Offers in Compromise (OIC) and Trust Fund Recovery Penalties (TFRP).
Beginning Dec. 1, 2008, for a two-year test period, IRS Appeals will offer post-Appeals mediation and arbitration for OIC and TFRP cases for taxpayers whose appeals are considered at the Appeals office in Atlanta, Ga.; Chicago, Ill.; Cincinnati, Ohio; Houston, Texas; Indianapolis, Ind.; Louisville, Ky.; Phoenix, Ariz.; and San Francisco, Calif.
Under these two alternative dispute resolution programs, the taxpayer or Appeals may request nonbinding mediation. The taxpayer may decline Appeals’ request for mediation. Appeals will evaluate a taxpayer’s request for mediation based on the criteria detailed in Revenue Procedure 2002-44 and Announcement 2008-111. A request for binding arbitration must be made jointly by the taxpayer and Appeals. The mediation and arbitration procedures do not create any additional authority for settlement by Appeals.
The non-binding mediation program is available for issues of fact and law. The binding arbitration program, however, is available only to resolve issues of fact.
Announcement 2008-111 contains the procedures for requesting post-Appeals mediation or arbitration.
Observation: If I understand the mediation program correctly, it will work like this:
- A taxpayer files an Offer in Compromise.
- After a thorough review, the OIC is rejected by the IRS’s Offer division.
- The taxpayer then appeals the IRS’ decision.
- The appeals officer, after a thorough review, sustains the IRS’s rejection of the Offer.
- After two thorough reviews by IRS officials, the taxpayer then has the right to request a post-appeal, non-binding mediation of the case.
Wouldn’t it be more logical (and useful) if mediation were made available pre- and not post-appeals?