The Internal Revenue Service has launched a new program to help taxpayers resolve tax disputes earlier and more efficiently. The initiative of the Office of Alternative Dispute Resolution Program Management will collaborate with the agency's Operating Business Divisions to promote alternative dispute resolution and improve the overall functionality of the IRS and the way it serves taxpayers and tax professionals .
According to IRS Commissioner Daniel Werfel, “This new office will revitalize existing programs and pilot new initiatives as part of IRS transformation efforts consistent with the IRS Strategic Operating Plan.”
The new office is being funded under the Inflation Reduction Act, passed in August 2022, to help overhaul the agency, which has struggled with being outdated and understaffed, and to allow it to enforce tax laws in more effective way.
Decline in ADR
Although ADR has been available for years as an early resolution option and can be a faster and more cost-effective approach to resolving cases, the IRS reports that the use of the programs has dropped about 65% during the last 10 years. The hope is that the program will bring renewed awareness and interest to ADR programs such as Expedited Resolution, Expedited Mediation, the Expedited Appeal Process and Post-Appeal Mediation and will allow the Appeals office to resolve disputes earlier in the examination process. The aim is also to make these programs more accessible.
Purpose of the New Office
The formation of the office comes after the agency issued a request for public comments on the matter in July 2023. In particular, the new office aims to remove barriers to participation in Post-Appeal Mediation. This program introduces a new mediator if the parties cannot reach an agreement during traditional Appeal settlement negotiations.
As part of its efforts, the office will also conduct outreach and education, raising tax professionals' awareness of the availability of ADR and understanding why there is so much interest in the programs. has dropped drastically. It will also coordinate the training and support of brokers, collect data and monitor the effectiveness of ADR offerings.
A welcome initiative
Tax practitioners seem to be open to this new program. “I appreciate this initiative from the IRS. Taking into consideration GAO report May 2023good to see the IRS taken positive steps to improve ADR in Appeal with this announcement on April 24, 2024,” said Michael Gregory, founder and owner of Michael Gregory Consulting, LLC.
He added, “The proof is in the pudding. We will have to see if the IRS can reverse the declining number of settlements on Appeal and if the IRS is more serious about placing cases on Appeal using the four approaches listed in the notice.”
Harvey I. Bezozi, a tax expert in Boca Raton, Fla., is also open to the new program. “In the real world, where I deal with the IRS every day representing famous A-list artists, I have found the IRS personnel assigned to these high-profile cases to be very fair and reasonable in negotiating settlements for my clients,” said Bezozi.
“By providing IRS auditors and collectors with clear and concise documentation in a timely manner, according to their requests, I can almost always avoid having my examination and collection cases assigned to an appeals officer.”
“However, most of the cases the IRS has in its voluminous enforcement inventory should benefit from the availability of revised administrative protocols as they are being introduced with their new Office of ADR Program Management. This ostensibly oversight-type function it reminds me and has some similarities with the IRS Office of the Taxpayer Advocate”, concluded Bezozi.