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IRS Mediation Pilot

by Colin Rule
February 2013

Novo Justice Blog by Colin Rule

Colin Rule

Michael A. Jacobs and Robert E. Weyman, Reed Smith:

“Taxpayers under audit and facing an assessment in excess of $1 million may be able to participate in mediation to expedite resolution of their case as part of a new Department pilot program. The timeframe for requesting to participate in the mediation program is limited, so taxpayers should be prepared to make the request prior to their exit conference.

Responding to taxpayer concerns that the appeal process in Massachusetts can take several years, the Department finalized guidance regarding its new administrative early mediation program. The pilot program is intended to resolve disputes within four months after the finalization of an audit through the use of mediation.

In order for a case to head to mediation, both the taxpayer and the Department must agree that mediation is appropriate—otherwise, standard appeal rules apply. While the administrative guidance lays out broad guidelines for the types of cases that the Department will deem appropriate for mediation, how they will be applied in practice remains to be seen. Our view is that the program could be extremely popular with taxpayers if the Department is open to considering a wide variety of cases for mediation.

Takeaways

Mediation must be agreed to prior to the issuance of the Notice of Intent to Assess by the Department
The exit interview is probably the best time to make the request
Mediation must be complete within four months absent unusual circumstances
Mediation must resolve all issues in the assessment; taxpayers cannot request mediation for only some issues in the assessment and appeal the rest
The program is available for proposed assessments in excess of $1 million where the issues and facts are fully developed
The Department’s goal is for the pilot program to include six to ten cases. Our understanding is that slots are still available in the pilot program.
If mediation is unsuccessful, the Department has put protections in place to prevent taxpayer’s (and the Department’s) submissions to the mediator from becoming discoverable in later litigation”
I think the IRS is an ideal candidate for ODR. Someone has to make this connection!

Biography


Colin Rule has worked at the intersection of technology and conflict resolution for the last two decades. He is CEO of Modria.com, an online dispute resolution service provider in Silicon Valley, and a non-resident Fellow at the Center for Internet and Society at Stanford Law School. From 2003 to 2011, he served as eBay and PayPal's first director of Online Dispute Resolution, designing and implementing systems that now resolve more than 60 million disputes each year. Mr. Rule is the author of Online Dispute Resolution for Business, published by Jossey-Bass in September 2002. He has presented and trained around the world for organizations including the U.S. Department of State, UNCITRAL, the International Chamber of Commerce, and the CPR Institute for Dispute Resolution, as well as teaching at UMass-Amherst, Stanford, Southern Methodist University, and Hastings College of the Law. He has written and been interviewed extensively about the Internet since 1999, with columns and articles appearing in ACResolution, Consensus, Dispute Resolution Magazine, and Peace Review. He holds a master's degree from Harvard University's Kennedy School of Government in conflict resolution and technology, a B.A. in peace studies from Haverford College, and he served as a Peace Corps volunteer in Eritrea from 1995-1997.



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Website: www.modria.com

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