8.26.3  Small Business Self Employed (SB/SE) Fast Track Mediation

Manual Transmittal

September 25, 2012

Purpose

(1) This transmits a revised IRM 8.26.3, Alternative Dispute Resolution (ADR) Program, Fast Track Mediation

Material Changes

(1) Revised IRM to reflect new organizational titles resulting from the Appeals 2012 Alignment Project.

(2) Revised 8.26.3.8.1 to remove the requirement for Account and Processing Support to create a closed office file.

(3) Revised 8.26.3.10 to correct the address where to send the Customer Satisfaction Survey.

Effect on Other Documents

This supersedes IRM 8.26.3 dated October 24, 2007

Audience

Appeals

Effective Date

(10-01-2012)

Susan L. Latham Director, Policy, Quality and Case Support

8.26.3.1  (10-24-2007)
Objective and Authority for SB/SE Fast Track Mediation (FTM)

  1. A primary objective of the Service is to resolve tax controversies at the lowest level without sacrificing the quality and integrity of those determinations. Alternative Dispute Resolution programs achieve this objective.

  2. The objective of FTM is to allow SB/SE personnel and SB/SE taxpayers an opportunity to mediate their disputes with an Appeals Official acting as a neutral party. It is optional for the taxpayer, and does not eliminate or replace existing dispute resolution options, including the taxpayer's opportunity to request a hearing before Appeals.

  3. Rev. Proc. 2003-41 formally establishes the SB/SE Fast Track Mediation (FTM) Program designed to expedite case resolution and to expand the range of dispute resolution options available to SB/SE taxpayers. The program is called "FTM Program" throughout this IRM section.

  4. Appeals and SB/SE jointly manage and administer the FTM Program.

  5. Appeals Officers trained in mediation work FTM cases. The mediator does not have settlement authority and cannot render a decision regarding any issue in dispute.

  6. The taxpayer does not have the option of using a non-IRS employee as a mediator.

  7. The entire process is estimated to take 30-40 business days . The case remains in SB/SE's jurisdiction during the entire process.

  8. Publication 3605, Fast Track Mediation - A Process for Prompt Resolution of Tax Issues, provides information on the FTM Program and is given to taxpayers at the close of the conference with an Examining Agent/Collection Officer, or at the end of the conference with the Group Manager.

8.26.3.2  (10-24-2007)
Collaborative Dispute Resolution Process

  1. The Appeals Official serving as a neutral participant assists SB/SE and the taxpayer to understand the nature of the dispute and to reach a mutually satisfactory resolution.

  2. The Appeals Official uses mediation techniques to focus issues and lead SB/SE and the taxpayer to self-determine the outcome of the dispute.

  3. SB/SE is an active participant during the mediation session. Since the mediator does not have settlement authority and cannot render a decision regarding any issue in dispute, the case is only resolved when the taxpayer and SB/SE reach an agreement.

8.26.3.3  (10-24-2007)
Initiating the FTM Process

  1. Either SB/SE or the taxpayer initiates FTM at the conclusion of an examination or certain Collection determination. The mediation session is designed to help facilitate communication between the parties and help resolve unagreed issues. Both parties must agree to mediate

  2. To initiate the FTM process, SB/SE completes a completed Form 13369, Agreement to Mediate, and a brief Summary of Issues and forwards it to Appeals. The taxpayer is not required to submit a formal protest, but must provide a written position on the issues.

  3. If the Form 13369 is executed by a person pursuant to a Power of Attorney executed by the taxpayer, it must express the taxpayer's grant of authority to consent to disclose the taxpayer's returns and return information by the IRS to third parties. A copy of the Power of Attorney must be attached to the agreement.

  4. All documents submitted with the Form 13369 are available to the other party.

8.26.3.4  (10-24-2007)
Case Eligibility in FTM

  1. FTM may not be the appropriate dispute resolution process for all SB/SE taxpayers. The SB/SE Group Manager or designee and the taxpayer will evaluate their individual circumstances to determine if this process meets their needs.

8.26.3.4.1  (10-01-2012)
Cases Included in FTM

  1. FTM is generally available for all SB/SE non-docketed cases and certain Collection source work. Due to possible complexity of issues in cases over $100,000 (tax only), further review is required by SB/SE to determine if the case is eligible for mediation.

  2. FTM is only initiated after an issue is fully developed.

  3. See the following for guidance on FTM for collection cases:

    • Collection Due Process (CDP) IRM 8.22.4, CDP Appeals Program

    • Offer in Compromise (OIC) IRC 8.22.3, Evaluation of Offers in Compromise

    • Trust Fund Recovery Penalty (TFRP) IRM 8.25.1, Trust Fund Recovery Penalty (TFRP) Overview and Authority

8.26.3.4.2  (10-24-2007)
Cases Excluded from FTM

  1. Not all cases worked by SB/SE are eligible for FTM. Below is a list of all issues/cases excluded from FTM:

    Docketed Cases Taxpayer already exercised option to take case to court vs FTM and/or other available alternatives.
    Absence of legal precedents and/or conflicts between Circuit Courts of Appeal Issues do not lend themselves to quick resolution, as they are precedent setting and require standard Appeals/Tax Court process.
    Compliance Coordinated Issues (CCI) and Appeals Coordinated Issue Program (ACI) Appeals Technical Guidance Coordinator must be involved in the decision-making process but is not available for the Mediation Session.
    Competent Authority Cases Involves issues arising between the US and a foreign country under the jurisdiction of the Assistant Commissioner, International.
    Campus Penalty Appeals Cases System is already in place to expeditiously move these cases to Appeals.
    Majority of the cases would not have had managerial involvement.

    Note:

    Penalty Appeals Cases worked by field employees would not be excluded.

    Campus (streamlined) OIC Cases Logistical restrictions (travel and budget) exist.
    Majority of the cases would not have had managerial involvement.
    Compliance not available to mediate Campus OIC cases.
    CAP Cases Five-day Collection Appeals Program (CAP).
    Automated Collection System (ACS) Cases Compliance not available to mediate ACS cases.
    Majority of the cases would not have had managerial involvement.
    Cases involving solely the failure of refusal to comply with the tax laws because of moral, religious, political, constitutional, conscientious, or similar grounds Issues do not lend themselves to quick resolution.
    See Reg. Sec. 601.106(b) Statement of Procedural Rules
    No-Show Cases Cases where the taxpayer has failed to respond to Service communications and no documentation was previously submitted to the examiner for consideration.
    Hazards of Litigation Issues where resolution depends on an assessment of the hazards of litigation, thereby requiring the Mediator have settlement authority.
    Whipsaw Issues Issues where resolution with respect to one party might result in inconsistent treatment in the absence of the participation of another party.
    Issues governed by closing agreements, res judicata, or controlling precedent Issues where mediation is not consistent with sound tax administration.

8.26.3.5  (10-01-2012)
Confidentiality to All Parties

  1. The FTM process is confidential with respect to all parties pursuant to IRC 6103. Employees of the Service, and persons invited by the Service to participate in the FTM process, must adhere to the confidentiality and disclosure provisions of the Internal Revenue Code. They will not voluntarily disclose information regarding any communication made during the FTM session, except as provided by statute, such as IRC 6103, IRC 7214(a)(8), and 5 U.S.C. section 574

  2. If the parties reach an agreement, SB/SE follows standard closing procedures. However, if an agreement is not reached, SB/SE closes the case as "Unagreed" . The case, if properly protested from a 30-day letter, is then forwarded to Appeals and assigned to a different Appeals Officer. Either party may withdraw from the process at any time.

8.26.3.6  (10-24-2007)
Receipt and Control of FTM Cases

  1. SB/SE and Appeals management work out local procedures to meet FTM time frames and foster effective communication between the functions.

  2. Instead of an administrative file, the FTM case has an FTM package or "Request to Mediate" which includes the following documents:

    • Form 13369, Agreement to Mediate

    • Compliance - Summary of Issues

    • Taxpayer's written position

8.26.3.6.1  (10-01-2012)
Assignment of an FTM Case

  1. Upon receipt of the FTM documentation the Appeals Team Manager (ATM) reviews the case for completeness and eligibility.

  2. If the case is accepted, the ATM notifies the SB/SE Group Manager, date stamps the Form 13369 with the date accepted, and provides a photocopy to Account and Processing Support (APS) for input into ACDS.

  3. The ATM assigns the case to a mediator within two business days of receipt of the Agreement. If the case does not qualify for FTM, the ATM notifies the taxpayer within two business day of receipt of the Agreement and returns all paperwork to SB/SE.

8.26.3.6.2  (10-24-2007)
Case Denied FTM

  1. If Appeals determines the case does not qualify or is otherwise denied for FTM, the ATM notifies the SB/SE Group Manager and returns all paperwork to SB/SE.

  2. A taxpayer is not entitled to a hearing to appeal the rejection of a case into FTM.

8.26.3.6.3  (10-01-2012)
Carding in an FTM Case - Account and Processing Support (APS)

  1. Form 13369, Agreement to Mediate, must be signed by the ATM before the case is input into ACDS.

  2. Carding in a FTM case is given priority treatment.

  3. When carding in the FTM case, APS follows the general provisions for carding in cases contained in IRM 8.20.5.1, Appeals Processing Manual, Processing and Establishing New Receipts. In addition, the following special entries are made on the case inventory screen:

    • Feature Code = FT

    • ASGNDATE = Consistent with normal ACDS procedure

    • REQAPPL = Latter of date FTM Agreement signed by taxpayer or SB/SE

    • RECDATE = Acceptance Date by ATM

    • CREDATE = Consistent with normal ACDS procedure

  4. Return level is not created on FTM cases.

8.26.3.7  (10-24-2007)
Conducting an FTM Session

  1. Due to the inherent conflict that results because the Appeals mediator is an employee of the IRS, the Appeals mediator provides a statement to the taxpayer stating the following:

    1. confirmation of his/her proposed service as a mediator

    2. he/she is a current employee of the IRS

    3. a conflict results from his/her continued status as an IRS employee

    4. this conflict will not interfere in the mediator’s ability to impartially facilitate the case.

  2. The mediator schedules the mediation session with the taxpayer and Compliance within 5 business days after case assignment. The mediator shares participant information with both parties and has the authority to limit the number of participants.

  3. Standard mediation techniques and procedures are applied in the mediation session. Generally, the mediation session begins with an initial joint discussion with all parties present. Both the taxpayer and SB/SE are given ample opportunity to present their position. After the initial joint discussion, the mediator holds individual discussions with the parties.

  4. At any time, either party may withdraw from the process prior to reaching a resolution by notifying the other party and the mediator in writing. If meaningful progress toward resolution stops, the mediator may terminate the process by notifying the taxpayer and SB/SE in writing.

  5. Mediation by phone is not recommended since the process is dependent on interaction between the parties and the mediator. However, the mediator may consider using the phone for the mediation session when circumstances warrant.

  6. The entire process normally takes an average of 30-40 calendar days to complete, but if requested by either party, the mediator allows a reasonable delay. Any delays are communicated to and coordinated with both parties. If the mediation session cannot be held within a reasonable amount of time, the mediator considers returning the Request to Mediate to SB/SE and advises both parties. Before returning the request the mediator discusses the case with management.

  7. The mediator attempts to bring the parties to a mutual resolution of the issues during the mediation session. If, after a reasonable time, it is apparent the parties will not reach a resolution, the mediator considers terminating the mediation session. The taxpayer is advised the case will be closed through standard SB/SE closing procedures.

  8. The mediator has the right to ask either party for additional information in order to have a full understanding of the issues being mediated.

8.26.3.7.1  (10-24-2007)
New Information Presented in FTM Session

  1. If during the mediation session, the taxpayer and/or SB/SE presents new information or new issues not previously considered, the mediator considers postponing or terminating the session until both parties have adequate time to review and evaluate the information.

8.26.3.8  (10-01-2012)
Securing Closing Documents

  1. A resolution reached by the parties through mediation is not binding on the parties for taxable years not covered by the agreement.

  2. If the case is resolved at the mediation session, the mediator has the parties sign the Form 13370, Fast Track Mediator's Report. A copy of the report is provided to the taxpayer and SB/SE.

  3. The Mediator submits the original Form 13370, Fast Track Mediator's Report to his/her manager along with a copy of the Case Activity Record (CAR). The manager initials and dates the report then submits to APS for closing.

  4. Once SB/SE secures the appropriate closing documents from the taxpayer, the case is closed using standard procedures.

8.26.3.8.1  (10-01-2012)
Closing Procedures for FTM Cases - Account and Processing Support (APS)

  1. APS uses the general provisions for closing cases found in IRM 8.20.7, Appeals Processing Manual, Appeals Case Closures.

  2. Use one of the following Closing Codes:

    • 14 - Case fully resolved

    • 15 - Case not resolved

    • 16 - Case partially resolved

    • 20 - Withdrawals

8.26.3.9  (10-01-2012)
Ex Parte in FTM Cases

  1. The prohibition against ex parte communications between Appeals Officers and other Service employees provided by section 1001(a) of the Internal Revenue Service Restructuring and Reform Act of 1998 does not apply to the communications arising in the FTM process because Appeals personnel, in facilitating an agreement between the taxpayer and Compliance, are not acting in their traditional Appeals settlement role.

  2. See section 2.05 of Revenue Procedure 2012-18, Ex Parte Communication Between Appeals and Other Internal Revenue Service Employees, Alternative Dispute Resolution, for additional information

8.26.3.10  (10-01-2012)
Customer Satisfaction Survey

  1. At the conclusion of the mediation session, the mediator provides the taxpayer with the IRS Appeals Fast Track Mediation (FTM) Customer Satisfaction Survey, along with a return envelope. The mediator explains the need for the survey and encourages the taxpayer to complete and return it to Appeals. This survey is used to evaluate the process and capture feedback.

  2. The mediator also does the following:

    • Informs the taxpayer participation in the survey is voluntary.

    • Provides taxpayer with a pre-addressed envelope with the following return address:

      Internal Revenue Service
      Office of Chief Appeals
      Attn: AP:PQS:TPP:ADR
      100 First Street, Suite 2000
      San Francisco, CA 94105

    • Requests the taxpayer return the survey within one week. If the taxpayer refuses to accept the survey, Appeals takes any follow-up action.


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