Tax Mediation & Arbitration To Handle An IRS Dispute

You may be familiar with the traditional ways to handle a tax dispute with the IRS but there are many alternative ways to handle your case.

Tax Mediation

Mediation is a simple process where a mediator negotiates a deal between two parties. Your mediator will go back and forth with you trying to come to an agreement with you and the IRS. A mediator can help you realize what kind of strengths and weakness you possess in the case and guide you to an understanding about your overall objective. Mediation is a great alternative to traditional resolution because it involves no court trial or legal proceedings.

Tax Arbitration

An alternative to going to Tax Court is to have an arbitrator or panel of arbitrators hear your case from both sides and then make a decision on the outcome. In most situations a decision by arbitration is binding for both parties involved. The process of arbitration is a lot like trial but not as formal. If you choose to have your case heard under binding arbitration then the decision will be final. This is important to consider when deciding how you want your case to be heard.

Benefits of Mediation & Arbitration

Mediation and arbitration both can be very beneficial to a taxpayer in the form of time and money saved. Litigation can be a very costly and time consuming process. These two alternatives can greatly reduce the need for litigation and the need for costly legal representation. At the same time you will also avoid all the interest and penalties that will accrue in the long process of litigation. Anything that will allow you to solve your IRS problem as quickly as possible should seriously be considered.

Compliance Assurance

The IRS has a program called the Compliance Assurance Program which is mainly used by businesses to solve specific transactions that the IRS believes are of high priority. This whole process happens before the business files its tax return and allows the IRS and business to work together to complete the return.

Fast Track Mediation

Fast track mediation is a program the IRS offers to taxpayers that wish to resolve their dispute in the shortest amount of time possible. Typically you can settle a case through fast track mediation in about 45 to 90 days depending on how complex your case actually is. This program extends to offer in compromise and trust fund recovery penalties as well.

The way the process works is an Appeals Officer appointed by the IRS will act as a mediator between you and the examination department of the IRS. The goal of the Appeals Officer is to facilitate a resolution between the taxpayer and the IRS as quickly as possible. Both the IRS and taxpayer must agree to fast track mediation and all issues must have already been explored and detailed for examination.

The fast track mediation program allows the taxpayer to try and solve their tax problem in a short amount of time without having the decision be final. If you are not satisfied with the outcome of your fast track case you can request to have a full appeals hearing.

Industry Issue Resolution

The Industry Issue Resolution Program is a program that was designed to aid taxpayers with industry specific questions regarding their tax returns. This program allows taxpayers to ask questions about industry specific tax disputes that are frequent and avoidable.

Large & International Business Resolution

The Pre-Filing Agreement & Comprehensive Case Resolution Program allows large businesses that are domestic and international to request help with their tax returns prior to filing. Specific questions and issues can be ironed out of a business return before having to file it with the IRS. This can save a lot of time and money because it avoids having to go back and change a return that has already been filed with the IRS.

Mediation after an Appeal

If you were not satisfied with the outcome of your appeal you may still request mediation even if your case is headed to Tax Court. The only requirement to enter into mediation after you have finished an appeal is that your case is not already on the Tax Court docket. This mediation is a standard mediation that we talked about earlier in this post.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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