17 January 2025 IRS pilot program expands taxpayer access to Fast Track Settlement and mediation programs
The IRS has announced (Announcement 2025-06) the launch of a pilot program that will expand access to its Fast Track Settlement (FTS) and Post Appeals Mediation (PAM) programs. The pilot program will run beginning on January 15, 2025, and expire on January 15, 2027. FTS is an optional alternative dispute resolution program that allows taxpayers with unagreed issues in at least one open tax year under examination to work together with Exam and the IRS Independent Office of Appeals (Appeals) to resolve outstanding disputed factual and legal issues while the case is still in Exam's jurisdiction. FTS is currently available to taxpayers under examination by the following IRS divisions: Large Business and International (LB&I), Small Business/Self-Employed (SB/SE) and Tax Exempt/Government Entities (TE/GE) (collectively, Exam). Post Appeals Mediation (PAM) is also an optional alternative dispute resolution program that allows a taxpayer and Appeals to resolve disputes through nonbinding mediation while a taxpayer's case is still under consideration by Appeals.
The IRS is also implementing a limited-scope Last Chance FTS pilot program for select cases under examination by SB/SE. Under this program, when a taxpayer submits a protest in response to a 30-day or equivalent letter issued at the conclusion of an examination under SB/SE's jurisdiction, the SB/SE Group Manager overseeing the case will ask Appeals to inform the taxpayer of the FTS option. If the taxpayer requests FTS and SB/SE agrees to participate, traditional FTS rules apply. If the taxpayer chooses not to request FTS, the case will be transferred by SB/SE to Appeals using currently existing procedures. The objective of this pilot is to determine whether FTS participation increases when the IRS reminds taxpayers about the program. The changes to FTS and PAM should increase the number of taxpayers using these alternative dispute resolution programs. Easing the single-issue ineligibility criteria should increase the number of cases that are accepted into FTS. Requiring executive-level approval for denials of FTS and PAM will elevate the decision-making to an organizational level that can potentially evaluate the likelihood of a successful resolution more neutrally. The Last Chance FTP pilot should also increase uptake of FTS by reminding, or even possibly educating, taxpayers of the availability of this dispute resolution tool. Allowing taxpayers to participate in both FTS and PAM means taxpayers may have up to three attempts to resolve their cases with the Appeals Division: FTS (though jurisdiction of the case remains with Exam), the normal Appeals process, and PAM. The question remains, however, whether these changes will increase the successful resolution of more cases. If taxpayers choose FTS or PAM, but the government is unwilling to participate meaningfully in either mediation scenario, then the changes may not produce the desired results.
Document ID: 2025-0272 | ||||||