The IRS on Dec. 12 issued Rev. Proc. 2014-63, which consolidates prior guidance related to the types of cases that may be mediated in appeals. The new revenue procedure expands and clarifies the types of examination and collection cases and issues in the appeals process that are eligible for mediation.
Under Section 7123, alternative dispute resolution procedures, like mediation and arbitration, are available for taxpayers who have certain unresolved issues at the conclusion of appeals, or have been unsuccessful at entering into a closing agreement or compromise. Generally, mediation is available for examination cases and certain collection cases in which a limited number of legal and factual issues remain unresolved following settlement discussions in appeals.
Over the past several years, the IRS has implemented pilot programs for issues that could qualify for mediation, such as offer-in-compromise (OIC) and trust fund recovery penalty (TFRP) cases, but only in select cities. In Rev. Proc. 2014-63, the IRS incorporated other IRS guidance, such as Announcements 2008-111 and 2011-6. It also provided details as to the scope of a mediation, when mediation is generally applicable and when it is not, and also when mediation is appropriate for OIC and TFRP cases. The revenue procedure also provides procedures on the mediation application process and what an agreement to mediate should contain.
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