The appeals office of the IRS will offer new taxpayer programs aimed at dispute resolution and focus on increasing awareness of such initiatives after an earlier government report said that dispute resolution programs were being poorly managed.
“ADR programs can be important tools for resolving tax disputes efficiently without litigation in a way that is fair and impartial to taxpayers and the government,” said the IRS.
The use of ADR programs fell by 65 percent between fiscal years 2013 and 2022, the report said. To complicate matters, the IRS doesn’t have enough data to understand why this happened.
For instance, the IRS doesn’t collect data on how many taxpayer requests for ADR are rejected. It also doesn’t know the costs and time involved in using these programs.
GAO speculates that a potential reason why ADR use has declined could be taxpayers not seeing any benefits from using them.
The tax agency has not yet monitored taxpayers’ experience with ADR. The lack of this information means that the IRS is unable to assess how it can improve a taxpayer’s use of such programs, the report stated.
GAO had made eight recommendations to improve ADR programs, including collecting data on what happens to taxpayer requests to use ADR, establishing clear objectives for the programs, and analyzing data collected from ADR assessments to improve performance.
ADR ProgramsThe four principal post-filing ADR programs offered by the Appeals office are:
- Fast Track Settlement (FTS): Available for taxpayers who are large or international businesses, small businesses or self-employed individuals, and tax-exempt and government entities. An independent Appeals mediator will seek to get the taxpayer and the IRS to agree on disputed issues, facilitating the settlement of such disputes.
- Fast Track Mediation - Collection (FTMC): Available for some collection cases. It aims to resolve taxpayer disputes resulting from Offers in Compromise and Trust Fund Recovery Penalties.
- Rapid Appeals Process (RAP): Under this program, the Appeals office tries to mediate with taxpayers to resolve issues while the jurisdiction of the case is still with the office.
- Post Appeals Mediation (PAM): This program is for situations when settlement discussions become unsuccessful and strong disputes remain. “Cases for which tax disputes have been previously mediated through a different ADR program, such as through FTS, are ineligible for PAM.”
Transformation and DigitizationAccording to Mr. Keyso, the IRS intends to transform the agency in a way as to resolve the taxpayers’ disputes “at the earliest possible stage.”
“We’re looking forward to restructuring the alternative dispute resolution process this year to help achieve that objective, and we look forward to continuing to provide taxpayers an impartial administrative forum for resolving tax disputes without litigation.”
- Promote digital platforms to improve how taxpayers communicate with the Appeals office.
- Promote paperless processes and other modernization efforts.
- Help taxpayers achieve “tax certainty” as early as possible during the dispute process. Tax certainty means that the taxpayer can quickly and accurately determine the amount of taxes they owe.
- Expanding taxpayer access to in-person conferences and video conferences if they do not live near an Appeals office.
“Appeals’ participation in IRS transformation and modernization efforts is critical to effectively and efficiently serving taxpayers,” said Deputy Chief of Appeals Liz Askey.
“By leveraging technology, we can reduce cycle time and improve both the taxpayer and employee experience.”