IRS Launches Two-Year Pilot Program to Make Post Appeals Mediation "More Attractive to Taxpayers"

The Internal Revenue Service (IRS) has launched a two-year pilot program that is intended to make the Post Appeals Mediation (PAM) process “more attractive to taxpayers.” The PAM process is an option for taxpayers who need to challenge decisions issued by the IRS’ Independent Office of Appeals. Learn more from Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

What Taxpayers Need to Know About the IRS’ Post Appeals Mediation (PAM) Pilot Program

For taxpayers who need to challenge unfavorable IRS audit determinations, filing an appeal with the IRS’ Independent Office of Appeals (“Appeals”) is often the first step in the process. For those who do not obtain a reversal from Appeals, there are a variety of potential next steps depending on the specific circumstances at hand.

One of these potential next steps is to pursue Post Appeals Mediation (PAM). As the IRS recently explained:

“Taxpayers can request PAM at the conclusion of an unsuccessful Appeals proceeding, and if the request is accepted, the parties meet in an accelerated mediation session where they make a final attempt to negotiate a mutually acceptable resolution. These sessions... are facilitated by an Appeals mediator with no connection to the underlying case, and taxpayers are invited to include a co-mediator at their own expense. The mediators promote settlement negotiations between the parties while helping them define the issues and identify common ground.”

Under the IRS’ new pilot program, “cases will be reassigned to an Appeals team unconnected with the underlying case who will represent Appeals in the mediation session.” This is intended to help ensure an unbiased approach to the mediation process—ideally with the result being that the PAM process will result in negotiated settlements more frequently. Otherwise, all aspects of the PAM process remain unchanged during the two-year pilot program period.

Whether it makes sense for a taxpayer to pursue the PAM process following a tax appeal depends on the nature of the issue(s) involved in the taxpayer’s appeal, the amount at issue, and various other factors. In most cases, there isn’t necessarily a downside to attempting to mediate a resolution with the IRS—as long as there is still enough time remaining to pursue other alternatives if necessary.

What Are the Alternatives to Post Appeals Mediation (PAM)?

What are the alternatives to Post Appeals Mediation (PAM)? Generally speaking, if a taxpayer is unwilling to accept the IRS’ determination of liability and Appeals upholds the IRS’ determination, then the next step (aside from pursuing mediation) is to litigate the dispute in federal court. Taxpayers can challenge Appeals’ decisions on various grounds; and, if pursuing mediation is unlikely to produce a favorable result under the circumstances at hand, then taxpayers can go directly to court without participating in the PAM process.

Request a Confidential Consultation with Boston Tax Lawyer Kevin E. Thorn

As with all aspects of dealing with the IRS, when deciding whether to pursue Post Appeals Mediation (PAM) following an unfavorable audit and appeal, informed decision-making is key. If you have questions about your options, we invite you to contact us for more information. To request a confidential consultation with Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 617-692-2989 or contact us confidentially online today.