WASHINGTON, D.C. — The Internal Revenue Service (IRS) has introduced three pilot programs aimed at refining its Alternative Dispute Resolution (ADR) initiatives. These programs are designed to provide taxpayers with more efficient and collaborative ways to resolve tax disputes outside of litigation. The announcement marks a significant step in the IRS’s broader efforts to modernize its operations and align with its Strategic Operating Plan.
Elizabeth Askey, Chief of the IRS Independent Office of Appeals, emphasized the agency’s commitment to improving ADR options. “We’re committed to providing taxpayers who wish to resolve their issues without litigation a choice of effective and efficient ADR options as early as possible,” she stated.
ADR programs, such as Fast Track Settlement (FTS) and Post-Appeals Mediation (PAM), offer mechanisms for taxpayers to address disputes with the IRS at various stages of the administrative process. These programs not only save time but also reduce the costs associated with traditional litigation, making them an attractive option for both taxpayers and the IRS.
Key Features of the Pilot Programs
The newly announced pilots focus on enhancing the flexibility, transparency, and usability of the existing FTS and PAM programs.
- Expanded Eligibility for Fast Track Settlement (FTS): Previously, cases with a single ineligible issue were barred from participating in FTS. Under the pilot, the Large Business and International (LB&I), Small Business and Self-Employed (SB/SE), and Tax Exempt and Government Entities (TE/GE) divisions will now allow taxpayers to use FTS on an issue-by-issue basis. This change broadens access to the program.
- Streamlined Review of ADR Requests: Requests to participate in FTS and PAM will now require approval from a first-line executive before being denied. This ensures a more deliberate and consistent review process. Taxpayers whose requests are denied will also receive a formal explanation, ensuring greater transparency in decision-making.
- Last Chance FTS Pilot: Targeting SB/SE taxpayers, this pilot involves Appeals proactively reaching out to inform taxpayers about the potential application of FTS before their case officially enters Appeals’ jurisdiction. This approach is intended to raise awareness and increase participation in ADR programs at a critical stage in case handling.
- Elimination of PAM Restrictions: The pilot removes the limitation that previously barred taxpayers from participating in PAM after using FTS. By allowing access to both programs, the IRS aims to encourage broader use of ADR mechanisms.
Improving the Taxpayer Experience
Michael Baillif, Director of Appeals’ ADR Program Management Office, highlighted the benefits of these enhancements. “The IRS has historically made ADR available at various stages of the administrative process. Because ADR can be a quicker, more collaborative and cost-effective approach to case resolution, we have been working to improve ADR functionality and emphasizing its benefits,” Baillif explained.
These pilots reflect input from numerous stakeholders, including recommendations from the Government Accountability Office and the Taxpayer Advocate Service. The adjustments are geared toward simplifying the dispute resolution process and providing more clarity for taxpayers.
A Broader Commitment to ADR
The introduction of these pilot programs underlines the IRS’s dedication to offering taxpayers multiple pathways to resolve disputes without resorting to litigation. ADR holds significant promise as a tool to de-escalate conflicts, foster collaboration, and achieve resolutions that are acceptable to all parties involved.
While the traditional appeals process will remain available to those taxpayers who prefer it, the IRS’s innovations in ADR programs signal an evolution in how the agency manages disagreements. By expanding access and removing restrictions, the IRS hopes to build taxpayer confidence and further its mission of efficient, equitable service delivery.
These pilots are part of the IRS’s ongoing efforts to modernize and optimize its operations, with additional improvements to ADR programs planned for the future. Taxpayers can anticipate a more user-friendly and transparent system that supports their rights and ensures timely resolutions to complex tax disputes.
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