IRS Appeals – Tax Relief Options

IRS Appeals mediation program

A new IRS revenue procedure updates Rev Proc 2002-44, 2002-2 CB 10, which formally established a mediation procedure for cases at the IRS Appeals administrative level. The new revenue procedure expands and clarifies the types of cases that may be mediated by Appeals. Generally, the program is available for cases in which a limited number of legal and factual issues remain unresolved following settlement discussions in Appeals.

IRS Code Sec. 7123(b)(1) provides the statutory authority for the Appeals mediation program. On July 1, 2002, Rev Proc 2002-44, formally established the Appeals mediation procedure. It modified and expanded the availability of mediation for cases that are already in the Appeals administrative process. Rev Proc 2009-44 supersedes Rev Proc 2002-44.

IRS Rev Proc 2009-44 modifies the Appeals mediation program to expand the types of cases that are eligible for mediation while also clarifying the types of cases that are ineligible. Significant changes include:

  • Mediation does not create any special settlement authority for Appeals. (Rev Proc 2009-44, Sec. 4.02)
  • Mediation may be available for certain offer in compromise and trust fund recovery penalty cases as provided for in Ann. 2008-111, 2008-48 IRB 1224 (see Federal Taxes Weekly Alert 12/04/2008), or any subsequent guidance issued by IRS. (Rev Proc 2009-44, Sec. 4.03(7))
  • For offer in compromise cases with liabilities of $50,000 or more, any settlement or agreement reached under Code Sec. 7122(b) must be reviewed by the Office of Chief Counsel. (Rev Proc 2009-44, Sec. 9.02)

IRS Mediation is available for:

  • Legal issues;
  • Factual issues;
  • A Compliance Coordinated Issue (CCI) or an Appeals Coordinated Issue (ACI) but not where the taxpayer has declined the opportunity to discuss the CCI or ACI issue with the Appeals CCI or ACI coordinator during the course of regular Appeals settlement discussions;
  • An early referral issue when an agreement is not reached, provided the early referral issue meets the requirements for mediation;
  • Issues for which a request for competent authority assistance has not yet been filed.
  • Unsuccessful attempts to enter into a closing agreement under Code Sec. 7121; and
  • Offer in compromise and trust fund recovery penalty cases as provided for in Ann. 2008-111 , or any subsequent guidance issued by IRS.

IRS Mediation is not available for:

  • Cases in which mediation is not appropriate under either 5 USCS 572 or 5 USCS 575, which provide the general authority and guidelines for use of alternative dispute resolution in the administrative process;
  • Issues designated for litigation;
  • Issues docketed in any court;
  • Collection cases, except for certain offer in compromise and trust fund recovery penalty cases as provided for in Ann. 2008-111 or any subsequent guidance issued by IRS;
  • Issues for which mediation would not be consistent with sound tax administration;
  • Frivolous issues;
  • “Whipsaw” issues, such as, issues for which resolution with respect to one party might result in inconsistent treatment in the absence of participation of another party;
  • Cases in which the taxpayer did not act in good faith during settlement negotiations; and
  • Issues that have been otherwise identified in subsequent guidance issued by IRS as excluded from the mediation program.

Our firm specializes in resolving tax controversy matters. For IRS appeals and tax relief options call Mike Habib at 1-877-78-TAXES