Mediating IRS Disputes

Last week I stated that the IRS will mediate certain disputes prior to forcing the taxpayer to file suit in federal court.   These usually arise in an appeals setting. 

 

 

The taxpayer must first propose a solution to a Settlement Officer.  If that person will not work with him, he first must go to the Revenue Officer’s supervisor and plead his case there.  If the supervisor also refuses relief, then he must appeal the denial to the appeals division.  If the appeals division also denies his request for relief, mediation is usually an option prior to filing an action in Tax Court.  The request for mediation must state that it is a factual question that is being mediated rather than a policy question.  In other words, the taxpayer and the IRS disagree on certain facts that will alter the outcome of the investigation.  If a compromise is reached, the case is settled, but if not, the taxpayer can still file his suit.