IRS Discontinues Appeals Arbitration Program

The Appeals Arbitration program will no longer exist as of September 21, 2015. The availability of arbitration following an adverse decision at the appeals stage of a case has been around in one form or another since the year 2000. I say “in one form or another” because it began as a pilot program intended to last only two years. In 2002 the pilot program was extended for another year. Then on October 30, 2006, the IRS published Rev. Proc. 2006-44, 2006-2 C.B. 800, formally establishing the Appeals Arbitration Program. The program underwent further expansion in 2008 when it was opened up to collection cases in select cities, meaning that taxpayers were permitted to request arbitration for resolution of Trust Fund Recover Penalties and rejected Offers in Compromise.

So why is the IRS scrapping appeals arbitration? It might have something to do with the fact that only two cases were settled using arbitration during the 14 years it existed. It has everything to do with that, so good move IRS. But what options are left besides going to US Tax Court? MEDIATION. The main difference between arbitration and mediation is that an arbitrator hands down a decision (sometimes binding) which more closely resembles an actual trial, and a mediator basically just helps the parties look at the issues and talk it out. Per the IRS:

Given the general lack of demand for arbitration and the fact that its use as a tool to settle disputes without litigation has not proven successful, the IRS is eliminating the arbitration program. Although Appeals arbitration is being eliminated, taxpayers may be eligible to request mediation for unresolved issues that remain after completion of settlement discussions in Appeals.

The IRS has a nifty online tool to help you decide if mediation is right for you.

IRS Appeals & Alternative Dispute Resolution

If you have an IRS tax debt and are unable to achieve a satisfactory resolution with the office originally assigned to handle your matter, you may need to call on the IRS Appeals Office to take a second look.  Last time I wrote about the procedures and steps leading up to Appeals.  Today I will discuss some of the options available to taxpayers already in Appeals.

Once the controversy has advanced to the stage of appeals the IRS offers a variety of “alternative dispute resolution” options designed to keep the matter out of court.

The mission of Appeals is to resolve tax controversies, without litigation, on a basis that is fair and impartial to both the Government and the taxpayer, and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service.

~ IRS Pub 4167

Fast Track Mediation (FTM)

  • Intended for Small Business/Self Employed taxpayers
  • Case remains in SB/SE
  • Parties must agree to FTM using Form 13369
  • Taxpayer meets with IRS representative and third party Appeals personnel
  • Solution normally reached within 40 days
  • Solution is not binding (i.e., parties are not obligated to accept the outcome)
  • Automated Collection Service (ACS) cases excluded

Fast Track Settlement (FTS)

  • Available to most other taxpayers (not just SB/SE)
  • Must complete application, Form 14017
  • Decision normally reached with 60-120 days
  • Taxpayer may withdraw at any time and retains all traditional appeal rights


  • For factual issues only (no legal issues)
  • Outcome is binding
  • Most collection issues excluded