Wednesday, September 9, 2015

IRS Eliminates Appeals Arbitration Program Due To Lack of Demand

The Internal Revenue Service has gotten rid of a rarely used program that was supposed to allow taxpayers to expedite the appeals process.

The IRS issued Revenue Procedure 2015-44, announcing the elimination of the Appeals arbitration program. The new revenue procedure obsoletes an earlier revenue procedure that formally established the Appeals arbitration program.

The IRS initially established the Appeals arbitration program as a two-year pilot program in 2000. A taxpayer and the Appeals function could jointly request binding arbitration on any issue that was left unresolved at the conclusion of appeals procedures or unsuccessful attempts to enter into a closing agreement under Section 7121 or a compromise under Section 7122 of the Tax Code.
On October 30, 2006, the IRS published Rev. Proc. 2006-44, 2006-2 C.B. 800, which formally established the Appeals arbitration program.

This revenue procedure obsoletes Rev. Proc. 2006-44 and eliminates the Appeals arbitration program. During the fourteen-year period in which arbitration was available, only two cases were settled using arbitration. 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. See Rev. Proc. 2014-63, 2014-53 I.R.B. 1014.

The elimination of the Appeals arbitration program is effective the date the new revenue procedure is published in the Internal Revenue Bulletin, scheduled for Sept. 21, 2015.

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