Magazine article The CPA Journal

IRS Encourages Fast-Track Mediation

Magazine article The CPA Journal

IRS Encourages Fast-Track Mediation

Article excerpt

Taxpayer representatives interested in more efficient and possibly less costly ways to resolve tax disputes should try the new optional fast-track mediation (FTM) program that the IRS will begin offering in October 2001. The FTM process originates in the compliance department (examination/collection) when the taxpayer and Compliance agree to submit the matters in dispute to mediation. Accordingly, neither a formal unagreed report (RAR) nor a formal protest needs to be submitted.The process is very fast and during the pilot study usually took less than a month.

FTM process. Taxpayers can use FTM to resolve factual issue disputes involving less than $100,000 of combined tax deficiency for valuations, transfer pricing, and unreasonable compensation. It also is available for offers in compromise of less than $50,000. Either the taxpayer or Compliance can initiate FTM by entering into a mediation agreement, which is then forwarded to Appeals, where it is assigned to a trained IRS mediator at no cost to the taxpayer. The IRS mediator assists the parties in reaching an agreement but does not render a decision regarding any issue in dispute. The process is confidential and does not set precedent. If any issues remain unresolved, the taxpayer will retain the usual appeals rights. Such cases will be assigned to another Appeals officer, in effect giving the taxpayer another chance.

The normal commercial mediation procedures are followed prior to and during the mediation (see "A Practical Guide to Mediation for CPAs," The CPA Journal, June 1995). …

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