8.26.10  Trust Fund Recovery Penalty Mediation Procedures

Manual Transmittal

September 28, 2012

Purpose

(1) This transmits new IRM 8.26.10, Trust Fund Recovery Penalty Mediation Procedures.

Background

On December 1, 2008, Appeals initiated a two-year pilot program in eight cities for post-Appeals mediation for Trust Fund Recovery Penalty cases. On January 24, 2011, Appeals extended the test program without changes through December 31, 2012. This IRM contains procedures for Appeals settlement officers involved in the post-Appeals mediation pilot program.

Material Changes

(1) This IRM section contains guidance for Appeals settlement officers involved in the post-Appeals mediation pilot program and whose cases are subject to post-Appeals mediation. Fast Track Mediation procedures for all Trust Fund Recovery Penalty cases are also included.

(2) Reflects new organizational terms and titles resulting from the Appeals 2012 Alignment Project.

Effect on Other Documents

RM 8.26.10 supplements Revenue Procedure 2009-44 and Announcement 2011-6.

Audience

Appeals settlement officers involved in the post-Appeals mediation pilot program. Appeals officers were part of a prior pilot and may follow IRM 8.26.5, Post Appeals Mediation (Non-Collection Cases) Procedures. The Fast Track Mediation procedures apply to all Appeals technical employees considering Trust Fund Recovery Penalty cases. Appeals Account and Processing Support procedures for both post-Appeals mediation and Fast Track Mediation are also included.

Effective Date

(10-01-2012)

Susan Latham
Director, Policy, Quality and Case Support

8.26.10.1  (10-01-2012)
Trust Fund Recovery Penalty Mediation - Overview

  1. The Internal Revenue Service Restructuring and Reform Act of 1998 enacted IRC 7123(b), which requires the Secretary to prescribe procedures under which a taxpayer or Appeals may request non-binding mediation on an issue unresolved at the conclusion of Appeals procedures.

  2. IRM 1.2.17.1.1, Policy Statement 8-1, affirms Appeals' commitment to the development and use of alternative dispute resolution (ADR) techniques.

  3. Revenue Procedure 2002-44, 2002-26 I.R.B. 10 was published on July 1, 2002 and formally established the overall Appeals mediation program. Revenue Procedure 2009-44, 2009-40 I.R.B. 1 was published October 5, 2009, superseding Revenue Procedure 2002-44. Collection cases, including Trust Fund Recovery Penalty (TFRP) cases, are excluded under Revenue Procedure 2009-44 except for those cases eligible under Announcement 2008-111.

  4. Announcement 2008-111, 2008-48 I.R.B. 1224 was published December 1, 2008. It modified Revenue Procedure 2002-44 and established a two-year pilot program for post-Appeals mediation (PAM) for taxpayers whose appeal is considered in one of the following cities:

    • Atlanta, Georgia

    • Chicago, Illinois

    • Cincinnati, Ohio

    • Houston, Texas

    • Indianapolis, Indiana

    • Louisville, Kentucky

    • Phoenix, Arizona

    • San Francisco, California

  5. Announcement 2011-6, 2011-4 I.R.B. 433 was published January 24, 2011 extending to December 31, 2012 the test program outlined in Announcement 2008-111.

    Note:

    During the pilot program, PAM is not available for cases in which the appeal is considered by an Appeals office that is not part of the pilot.

8.26.10.2  (10-01-2012)
TFRP Fast Track Mediation

  1. Fast Track Mediation (FTM) takes place while the TFRP is under the jurisdiction of the Collection function. FTM is non-binding and voluntary to both IRS and the taxpayer. Each party retains 100% control over the decisions they make through the mediation process, which means the mediator, also referred to as the FTM Appeals Official, has no settlement authority. The FTM Appeals Official may, however, recommend a resolution to the parties based on an analysis of the issues. The disputing parties must ultimately reach their own negotiated settlement for mediation to be successful,

    Note:

    FTM does not eliminate or replace the taxpayer's opportunity to request a conference with a Collection manager or administratively appeal Collection's decision in a TFRP matter.

    Reminder:

    If a formal notification of proposed TFRP assessment (Letter 1153) was issued, FTM neither suspends nor extends the period of time the taxpayer has to request a hearing before Appeals.

  2. The TFRP program is administered by the Small Business/Self- Employed (SBSE) field compliance function. FTM is jointly administered by Appeals and SBSE and is designed to promote issue resolution within an average of 30 to 40 days from the initial joint discussion between the FTM Appeals Official and the parties.

  3. Revenue Procedure 2003-41 formally established the SBSE FTM program. The goal of FTM is to help taxpayers resolve TFRP disputes with the Collection function before a decision is final. If a settlement can be negotiated while the case is still with Collection, it eliminates the need for a formal TFRP appeal.

  4. FTM is available for both legal and factual issues. FTM is not the place to consider a new issue or to develop an undeveloped or underdeveloped issue. For FTM to be appropriate, all issues except for those for which mediation is requested must be resolved and the issue(s) to be mediated should be fully developed with clearly defined positions by both parties.

  5. FTM will be considered only after the revenue officer has:

    1. Conducted and completed a thorough TFRP investigation,

    2. Addressed all issues raised by the taxpayer, and

    3. Made a reasonable attempt to resolve the dispute and reach an agreement.

  6. See also Publication 3605 , Fast Track Mediation - A Process for Prompt Resolution of Tax Issues.

8.26.10.2.1  (10-01-2012)
Overview of SBSE's TFRP FTM Process

  1. Taxpayers expressing an interest in FTM may first request a conference with the Collection group manager. The opportunity to mediate should only be granted after the first line manager has reviewed the case and determined that the issues in dispute may be resolved in mediation. If the FTM request is approved, the revenue officer will complete Form 13369, Agreement to Mediate.

  2. The revenue officer will also provide a brief summary outlining the issues. The taxpayer may also submit a summary of the issues, but a formal protest is not required.

  3. Within three (3) business days of securing the necessary signatures on the Form 13369, the revenue officer will provide a copy of the following to the taxpayer and follow locally established guidelines for submitting the mediation request to Appeals:

    • Form 13369

    • Brief summary of issues

8.26.10.2.2  (10-01-2012)
TFRP FTM Procedures for Appeals Technical Employees

  1. All applications to the FTM process require the approval of an Appeals Team Manager (ATM) before acceptance into FTM.

  2. If the case is not accepted for FTM, the ATM will:

    1. Notify the taxpayer within two (2) business days of receipt of the Form 13369, Agreement to Mediate

    2. Notify the Collection group manager

    3. Return all paperwork to Collection

    Note:

    The decision to not approve an application for the FTM program is final and not subject to administrative appeal or judicial review.

  3. See IRM 8.26.10.3.1 below for information on TFRP cases or issues that are generally appropriate for mediation as well as those for which mediation is not available. The ATM may also contact the Appeals Tax Policy & Procedure (TPP) ADR program analyst for Collection issues to discuss mediation eligibility and other mediation-related issues.

  4. If the FTM request is approved, the ATM will:

    1. Date the Form 13369

    2. Provide a copy of the dated Form 13369 to the Appeals Account and Processing Support (APS)

    3. Notify the Collection group manager

    4. Select an appeals officer or settlement officer (SO) to serve as the FTM Appeals Official (mediator)

    5. Assign the case within two (2) business days of receipt of the Form 13369

  5. The FTM Appeals Official must be trained in mediation. A full list of trained mediators is available on the Appeals web site. The taxpayer does not have the option of using a non-IRS mediator in an FTM case.

  6. The FTM Appeals Official does not have settlement authority and cannot render a decision regarding any disputed issue.

  7. Per section 2.05 of Revenue Procedure 2012–18, the prohibition against ex parte communications between SOs and other Service employees as 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 program because the FTM Appeals Official is not acting in his/her traditional Appeals settlement role when facilitating an agreement between the taxpayer and Collection.

  8. Either party may withdraw from the mediation process at any time by notifying the other party and the FTM Appeals Official in writing. If it is determined that meaningful progress toward resolution of the issues has stopped, the FTM Appeals Official also may terminate the mediation process by notifying the taxpayer and Collection in writing.

  9. In preparation for the FTM session, thoroughly review Revenue Procedure 2003-41 and IRM 8.26.3, Small Business/Self-Employed (SBSE) Fast Track Mediation.

8.26.10.2.2.1  (10-01-2012)
Establishing TFRP FTM Work Unit - APS Procedures

  1. An TFRP Work Unit (WUNO) must be established on the Appeals Centralized Database System (ACDS). The FTM TFRP case will be controlled on ACDS following normal procedures except for the following:

    • Feature Code = FT

    • REQAPPL = The date the Form 13369 is signed by taxpayer or Collection, whichever is latest

    • RECDATE = Date placed on Form 13369 by ATM

    • KeyPeriod = 777777

    • No return information should be entered

8.26.10.2.2.2  (10-01-2012)
Agreement Reached - TFRP FTM

  1. At the conclusion of a successful mediation, the FTM Appeals Official will prepare Form 13370, Fast Track Mediator’s Report. The Form 13370 must be signed by:

    • FTM Appeals Official

    • Taxpayer or authorized representative

    • Revenue officer

    • Collection group manager

  2. A copy of the signed Form 13370 will be given to both parties. Collection will follow established closing procedures to process the settlement.

8.26.10.2.2.3  (10-01-2012)
No Agreement Reached - TFRP FTM

  1. If the parties fail to resolve the disputed issue(s), the FTM Appeals Official will prepare the Form 13370 and submit a copy to each party. Collection will close the case in accordance with established procedures and the taxpayer retains all applicable TFRP appeal rights.

  2. The FTM Appeals Official will submit the original Form 13370 and a copy of the Case Activity Record (CAR) to the ATM. The ATM will initial and date the Form 13370 and submit the documents to APS for closing.

8.26.10.2.2.4  (10-01-2012)
TFRP FTM WUNO Closing Procedures - APS

  1. Use one of the following Closing Codes:

    • 14 - Case fully resolved

    • 15 - Case not resolved

    • 16 - Case partially resolved

    • 20 - Withdrawal

  2. Collection already received a copy of the Form 13370 at the conclusion of the FTM session, so APS does not need to send anything to Collection as part of closing the FTM TFRP WUNO.

8.26.10.3  (10-01-2012)
Introduction to the Post-Appeals Mediation Program for TFRPs

  1. Post-Appeals mediation (PAM) is an extension of the Appeals process and will enhance voluntary compliance. Mediation is appropriate only after:

    1. Appeals settlement negotiations are unsuccessful,

    2. All issues are resolved but for the issue(s) for which mediation is requested, and

    3. The issue(s) for which mediation is requested is/are fully developed

  2. Appeals may mediate only those cases over which it has jurisdiction, so the taxpayer's written request for mediation must be submitted before the case is closed in Appeals. See IRM 8.26.10.3.2 below.

  3. Mediation is a non-binding process that uses the services of a mediator as a neutral party to help Appeals and the taxpayer reach their own negotiated settlement. To accomplish this goal, the mediator will:

    • Act as a facilitator

    • Assist in defining the issues

    • Assist in identifying possible barriers or roadblocks that may be preventing settlement

    • Promote settlement negotiations between Appeals and the taxpayer

  4. The mediator does not have settlement authority and will not render a decision regarding any issue in dispute.

8.26.10.3.1  (10-01-2012)
Eligibility for TFRP Post-Appeals Mediation

  1. Mediation is optional to both the taxpayer and Appeals. Appeals is committed to mediation as part of its overall ADR program, but mediation does not provide Appeals any additional settlement authorities beyond the standard Appeals process. Appeals also has a responsibility to ensure its ADR programs and the participating cases and issues are consistent with sound tax administration. For these reasons, not every case or issue is eligible for PAM.

  2. Mediation is available for both legal and factual issues. However, mediation is not the place to consider a new issue or to develop an undeveloped or underdeveloped issue.

  3. Both pre-assessment (Letter 1153) and post-assessment (claim) TFRP cases are eligible for mediation.

  4. Provided all facts are known by both parties, TFRP cases or issues that would generally be appropriate for mediation include:

    1. Whether a person was required to collect, truthfully account for, and pay over income, employment or excise taxes

    2. Whether a responsible person willfully failed to collect or truthfully account for and pay over such tax, or willfully attempted in any manner to evade or defeat payment of such tax

    3. Whether a taxpayer sufficiently designated a payment to the trust fund portion of the unpaid tax

    4. Whether the taxpayer provided sufficient corporate payroll records to establish that a corporate tax deposit was in the amount required by Treas. Regs 31.6302-1(c) and thus was considered a designated payment to be applied to both the trust fund and non-trust fund portions of the employment taxes associated with that specific payroll. See the Note to IRM 5.7.4.3 (7).

    See section 5.01 of Announcement 2011-6.

  5. Rev. Proc. 2009-44 lists several types of cases or issues for which for which mediation will not be available, including:

    1. An issue designated for litigation or docketed in any court

    2. Issues for which mediation would not be consistent with sound tax administration, e.g., those in which Appeals has no ability to settle, such as arguments based upon something other than responsibility, willfulness or the TFRP amount. Examples include:

      Example:

      Officer A has requested mediation in a proposed TFRP assessment case. During the appeals process, Officer A raised no specific responsibility or willfulness arguments and did not dispute the amount of the proposed TFRP assessment. Officer A's only argument is that Officer B, who did not contest his liability for the TFRP, is more responsible and therefore IRS should go after Officer B instead. Liability for the TFRP under IRC 6672 is based strictly on the merits of each individual's responsibility and willfulness. If Officer A meets the statutory responsibility and willfulness requirements and raises no arguments to dispute such during his appeal, then simply saying someone else is more responsible is not an issue that Appeals has an ability to settle and Appeals will not agree to mediation on this issue.

      Example:

      Officer C has requested mediation in a TFRP claim case arguing that she was not directly involved in making federal tax deposits and further had no control over the voting stock of the corporation. The case file, however, shows she was an officer and a shareholder, signed 75% of all checks and almost all of the payroll checks, exercised her authority to determine which creditors would be paid, hired and fired employees,; and was fully aware of the unpaid taxes as they accrued. In this instance, Appeals determined that even if it conceded that she wasn't directly involved in making federal tax deposits and/or had no control over the voting stock, the issues of responsibility and willfulness were still well established and there were no hazards of litigation. Even though Appeals would generally agree to mediate specific aspects of responsibility, it would not be consistent with sound tax administration to do so in this instance because the disputed issues don't have a sufficient impact on the overall determination of liability under IRC 6672.

      Example:

      Officer D has requested mediation in a proposed TFRP assessment case. During the appeals process, the POA for Officer D raised no specific responsibility or willfulness arguments and did not dispute the amount of the proposed assessment. The POA's only argument is that IRS should not assess the TFRP because it's not collectible. Nonassertion determinations based upon collectibility are discretionary to Collection under IRM 5.7.5 and are not appealable. Per IRM 8.25.1.1, Appeals is only responsible to determine willfulness and responsibility under IRC 6672. Nonassertion based upon collectibility is not an issue that Appeals has an ability to settle and therefore won't agree to mediation on this specific issue.

    3. Frivolous issues

    4. Cases where the taxpayer did not act in good faith during settlement negotiations. Examples of this within the context of a TFRP case may include cases in which:

      Example Description Eligible for Mediation?
      1 Taxpayer did not participate in the Appeals process by failing to show up for the scheduled conference and/or failing to respond to the Appeals letter in which the conference date and time were scheduled.

      Example:

      After initial review of the TFRP case, settlement officer Pike sent out a letter scheduling the conference for March 30. The taxpayer was not available when Pike called on March 30 and did not bother calling to postpone or reschedule the conference.

      No
      2 Taxpayer failed to respond to document requests or failed to adequately provide supplemental information or documentary evidence requested by Appeals No
      3 Taxpayer failed to respond timely to offers made by Appeals to settle No
      4 Taxpayer failed to address arguments and precedents raised by Appeals No
      5 Taxpayer clearly refused to submit to a Form 4180 interview with Collection See below for specific examples
      5
      Example A
      The ICS history clearly indicates revenue officer Smith attempted to secure a Form 4180 interview with Officer A, but the POA for Officer A stated they would not agree to a Form 4180 interview. In this instance, the taxpayer failed to negotiate in good faith and Appeals would not generally agree to mediate. No
      5
      Example B
      There is no indication in the ICS history or elsewhere of the revenue officer asking the taxpayer for a Form 4180 interview. In this instance, the taxpayer did not fail to negotiate in good faith and thus is eligible for consideration of post-Appeals mediation. Yes
      5
      Example C
      The ICS history indicates revenue officer Smith and Officer B were scheduled to meet for a Form 4180 interview on May 11. On May 10, Officer B contacted revenue officer Smith to cancel the meeting because of a personal matter and asked the revenue officer to reschedule the meeting. Revenue officer Smith agreed but closed the corporate case out three months later and recommended assessing the TFRP against Officer B based on the Form 4180 interviews of other officers as well as other information in the file. In this instance, the taxpayer did not fail to negotiate in good faith and thus is eligible for consideration of post-Appeals mediation. The revenue officer could have rescheduled a time for the Form 4180 as requested by the taxpayer but independently decided such was not needed. Yes

  6. Taxpayers may request mediation on more than one issue. Depending on the issues for which mediation is requested, Appeals may agree to mediate one and not agree to mediate another.

    Example:

    In addition to arguing that IRS should collect the underlying employment tax from the corporation, Officer C in the above example also says that her actions as vice president were not willful because she was at all times acting solely at the direction of the president. Appeals will generally agree to mediate an argument over a specific factual issue as it relates to willfulness, but will not agree to mediate the issue of IRS collecting the underlying employment tax from the corporation.

    Note:

    If the taxpayer agrees, Appeals may proceed to mediation over the specific willfulness argument. If the taxpayer does not agree to mediate only the specific willfulness issue, then Appeals must deny the mediation request in full because the argument that the taxpayer cannot be held liable for the TFRP because IRS should have collected the underlying employment tax from the corporation is not an issue that is eligible for mediation.

8.26.10.3.2  (10-01-2012)
TFRP Post-Appeals Mediation Procedures for SOs

  1. Either the taxpayer or Appeals may submit a request for mediation after consulting with the other party.

  2. Pub 4167, Appeals - Introduction to Alternative Dispute Resolution, explains the mediation process and is included as an enclosure in the Uniform Acknowledgement Letter (UAL) sent by the Appeals Team Manager when the case is received in Appeals.

    Note:

    Be sure the Case Activity Record (CAR) documents Pub 4167 was included as an enclosure with the UAL. See IRM 1.4.28.3.1., Appeals Managers Procedures.

  3. Per section 4.01 of Revenue Procedure 2009-44, cases are eligible for mediation "while they are under consideration by Appeals." If a timely mediation request is received, See IRM 8.26.10.3.2.2 for instructions on how to process the formal request for mediation.

  4. Section 6 of Announcement 2011–6 details the manner in which a taxpayer must formally request mediation. There is no form to complete, but the request for mediation must be in writing and generally contain the following:

    1. The taxpayer's name, Taxpayer Identification Number (TIN), address, and the name, title, address and telephone number of a person to contact

    2. The name of the ATM and/or SO

    3. The tax period(s) involved

    4. A description of the issue(s) for which the taxpayer is requesting mediation and sufficient details to support the taxpayer's position as to why he/she is not responsible, actions were not willful, and/or why the TFRP amount should be changed

    5. The request for a non-IRS co-mediator, if so desired

    6. A representation that the issue in not excluded in either Revenue Procedure 2009-44 or Announcement 2011-6.

      Note:

      A written ADR request received within the prescribed time frame is considered timely even if it doesn't contain all or most of the above information. All required information will be obtained through the standard pre-mediation session process, so Appeals will consider the merits of a timely received written document that specifically asks for mediation. See paragraph (7) below for information on receipt of incomplete mediation requests.

    Reminder:

    Notify the ATM of a late-received request for mediation. Fax a copy of both the written mediation request and the denial letter to the Appeals Tax Policy and Procedure (TPP) TFRP ADR program analyst.

  5. To enable Appeals to determine whether to agree to mediate, the taxpayer needs to:

    1. Identify the specific issue(s) he/she disputes and for which mediation is requested

    2. Provide the details of his/her position with regard to the disputed issue, including the specific dollar amount or reduction in the TFRP computation associated with that position, and

    3. The basis or reason(s) for such position

      Note:

      See section 5 of Revenue Procedure 2009-44 and section 6 of Announcement 2011-6.

  6. If the taxpayer submits a request for mediation before settlement discussions are complete or before Appeals is ready to make a decision on the TFRP case, the request for mediation is premature but still valid. Revenue Procedure 2009-44 simply requires a written request for mediation. Input ACDS feature code 'MD' on the TFRP WUNO and fax a copy of the mediation request to the TPP TFRP ADR program analyst advising in the fax cover that the request is premature and settlement discussions are still ongoing. Appeals must hold open the mediation request until settlement discussions are complete.

    1. If a settlement is negotiated, have the taxpayer submit a written statement withdrawing the mediation request.

    2. If a settlement cannot be negotiated, contact the TPP TFRP ADR program analyst to discuss mediation eligibility. See IRM 8.26.10.3.2.2 for full SO mediation processing procedures.

  7. If the taxpayer submits a request for mediation that does not contain sufficient information to know what issues the taxpayer wants to mediate, the request is still valid per Revenue Procedure 2009-44. Input ACDS feature code 'MD' on the TFRP WUNO and fax a copy of the mediation request to the TPP TFRP ADR program analyst advising in the fax cover that you are working with the taxpayer to “perfect” the mediation request. Contact the taxpayer and advise that Appeals does not have enough information to decide whether to agree to mediation and allow no more than 14 days to provide the necessary details outlined in section 6.03 of Announcement 2011-6.

    1. If the taxpayer provides specific details, contact the TPP TFRP ADR program analyst to discuss mediation eligibility. See IRM 8.26.10.3.2.2 for full mediation processing procedures.

    2. If the taxpayer does not provide the necessary details, the ATM will first discuss the case with the TPP TFRP ADR program analyst. If TPP concurs, the ATM will issue a letter denying the mediation request and fax a copy of the letter to TPP.

8.26.10.3.2.1  (10-01-2012)
Headquarters Involvement (TFRP Mediation)

  1. All requests for mediation under Announcement 2011-6, or any successor guidance, require the involvement of the TPP TFRP ADR program analyst.

  2. The role of the TPP TFRP ADR program analyst includes:

    • Providing technical guidance to Appeals field personnel

    • Ensuring Appeals' compliance with Revenue Procedure 2009-44, Announcement 2011-6, and general ADR policies and procedures

    • Assisting in identifying issues and determining whether the issues are eligible for mediation

    • Participating as the Appeals subject matter expert in the pre-mediation administrative conference call during which the mediation process itself will be discussed and Agreement to Mediate negotiated. See IRM 8.26.10.3.2.4 and sections 5.03 and 6.01 of Revenue Procedure 2009-44

    • Assisting Appeals and the taxpayer in the selection of the mediator (see section 7.01 of Revenue Procedure 2009-44) by providing information concerning eligible Appeals mediators and available non-IRS co-mediators

    • Assisting in drafting the Agreement to Mediate and Mediation Participants List

    • Reviewing the Agreement to Mediate and Mediation Participants List before the ATM signs it on behalf of Appeals

  3. The ultimate decision as to whether Appeals will agree to mediate a particular case shall be made by the appropriate Appeals manager after consulting with the TPP TFRP ADR program analyst. The ATM is authorized to approve the denial of a mediation request. The Appeals Area Director must approve the acceptance of all cases for mediation.

  4. The TPP TFRP ADR program analyst is responsible to gather data and feedback during the test period so Appeals can monitor and assess the interim procedures and overall effectiveness of the program.

8.26.10.3.2.2  (10-01-2012)
Processing Receipt of TFRP Mediation Request

  1. Upon receipt of a timely request for mediation, thoroughly review Revenue Procedure 2009-44 , Announcement 2011-6, and IRM 8.26.10.

  2. Sections 5.02 of Revenue Procedure 2009-44 and 6.02 of Announcement 2011-6 require a request for mediation to be in writing. A taxpayer merely verbally asking for mediation is insufficient and cannot be treated as a formal mediation request. If the taxpayer verbally asks for mediation, inform him/her that such a request must be made in writing and provide general information on the mediation process. Refer the taxpayer to Revenue Procedure 2009-44 and Announcement 2011-6. See IRM 8.26.10.3.2 for information and instructions concerning time frames within which the taxpayer must submit a formal request for mediation.

  3. If the mediation request is submitted directly to the SO, promptly inform the ATM.

  4. Upon receipt of a written mediation request, the ATM or SO will fax a copy to the TPP TFRP ADR program analyst. The program analyst will contact the ATM to set up a time to discuss the case's mediation eligibility and provide general mediation policies and procedures. The ATM and SO should both be at this meeting. The ATM serves as the Appeals decision maker and the SO serves as the technical expert on the case itself.

    Note:

    Fax a copy of the written mediation request to the TPP TFRP ADR program analyst even if the request was not made timely.

  5. The SO inputs ACDS Action Code 'MI' (mediation in) . This will systemically add feature code 'MD' to the WUNO. If there are multiple WUNOs, be sure to input Action Code 'MI' to each WUNO.

    Note:

    Do not input the 'MI' Action Code or 'MD' feature code if the request for mediation was received late.

  6. Section 5.03 of Revenue Procedure 2009-44 calls for the ATM to respond to the taxpayer and SO within two (2) weeks after Appeals received the formal mediation request.

8.26.10.3.2.3  (10-01-2012)
TFRP Mediation Request Denied

  1. If the mediation request is denied, the ATM will promptly inform the taxpayer of the decision in writing, advise the SO of the decision, and fax a copy of the denial letter to the TPP TFRP ADR program analyst.

  2. The ATM's denial of a mediation request is not subject to either further review by Appeals or judicial review. Although no formal appeal procedure exists for the denial of a mediation request, the taxpayer may request a conference with the ATM to discuss the denial. The TPP TFRP ADR program analyst is available to take part in this conference. See section 5.03 of Revenue Procedure 2009-44.

  3. The SO inputs ACDS Action 'MO' (mediation out) the date the mediation denial letter is issued.

    Note:

    ACDS will not allow input of Action Code 'AC-FR' if there is an open 'MI' on the WUNO. A system message appears stating Action Code 'MO' must be input to make the 'AC-FR' available.

  4. The SO may proceed with closing out the TFRP case per standard procedures. See IRM 8.25.2, Trust Fund Recovery Cases Worked in Appeals, and IRM 8.25.3, Processing and Closing Procedures for TFRP Cases.

8.26.10.3.2.4  (10-01-2012)
TFRP Mediation Request Approved

  1. The Appeals Area Director must approve the acceptance of all cases for mediation. Upon approval of the mediation request, the ATM will promptly inform the taxpayer, the SO and the TPP TFRP ADR program analyst to schedule an administrative pre-mediation conference call. The purpose of this conference call is to:

    • Go over the mediation process and answer any questions the taxpayer may have about the process so the parties don't have to spend time doing so at the mediation session

    • Discuss the selection of a mediator

    • Discuss or negotiate the mediation participants

    • Negotiate the terms of the Agreement to Mediate

  2. If the taxpayer indicates that he/she also wants a non-IRS co-mediator and doesn't have anyone in particular in mind, the TPP TFRP ADR program analyst is available to provide the taxpayer with the names of qualified persons who have contacted Appeals and expressed an interest in serving as a mediator in Appeals' ADR programs. The decision whether to contact the person(s) provided by the TPP TFRP ADR program analyst is strictly the taxpayer's.

  3. The mediation session will take place in the Appeals office where either the ATM or the SO who worked the case is/are located.

    Example:

    A settlement officer located in Louisville considered an TFRP from taxpayer who resides in Cheyenne, Wyoming and has a POA located in Denver. The Appeals Team Manager is located in Indianapolis. If Appeals agrees to mediate, the mediation session will be at either the Louisville or Indianapolis Appeals office.

  4. Either party may withdraw from the mediation process at any time prior to reaching a settlement of the issues being mediated by notifying the other party and the mediator in writing. See IRM 8.26.10.3.2.5 for additional details on withdrawing from the mediation process.

8.26.10.3.2.4.1  (10-01-2012)
Agreement to Mediate - TFRP

  1. The taxpayer and Appeals will enter into a formal and written agreement to mediate. See Exhibit 8.26.10-2 for a TFRP Model Agreement to Mediate. The same Model Agreement to Mediate is also available as a Word document on the Post-Appeals Mediation (Collection Cases) web page.

  2. The Agreement to Mediate will be negotiated during the pre-mediation conference call described in the preceding section. The TPP TFRP ADR program analyst will work closely with the ATM in preparing the Agreement to Mediate. Any deviations to the Model Agreement to Mediate - TFRP require the approval of the Director of TPP - Collection and Processing.

  3. The Agreement to Mediate should:

    1. Be as concise as possible

    2. Precisely specify the issue(s) for which the parties have agreed to mediate

    3. Identify the date by which the parties agree the mediation session will be held and its location

    4. Set forth any limitation on the number, identity or participation of the mediation session participants

    5. Prohibit ex parte contacts between the mediator and the parties. Additional information on ex parte contact is found in IRM 8.26.10.3.2.4.7.

  4. The Agreement to Mediate will be completed as soon as practical but no more than three (3) weeks after Appeals notified the taxpayer that the mediation request was approved. See section 6.01 of Revenue Procedure 2009-44.

  5. The ATM will sign the Agreement to Mediate on behalf of Appeals after submitting a final draft of the Agreement to the TPP TFRP ADR program analyst for review and approval. Once approved by TPP and signed by the ATM, fax a copy of the Agreement to Mediate to the taxpayer for signature and ask the taxpayer to sign the document and fax a copy back to the ATM. Give the taxpayer no more than seven (7) days to return the signed Agreement and Consent and advise that Appeals may withdraw from mediation if taxpayer doesn’t respond by the deadline.

  6. The taxpayer must also sign a Consent to Disclose Tax Information to ensure all IRS personnel at the mediation session may discuss and disclose the taxpayer's return or return information (as defined IRC 6103(b)(2)) to all persons in attendance at the mediation session. See Exhibit 8.26.10-3 for the Consent to Disclose Tax Information. The same Consent to Disclose Tax Information is available as a Word document on the Post-Appeals Mediation (Collection Cases) web page

    Note:

    The consent to disclose tax information provision was part of the Agreement to Mediate. When Revenue Procedure 2009-44 was published in October of 2009, it was extracted from the Agreement to Mediate and listed as a separate Exhibit 4.

  7. Fax copies of the signed Agreement to Mediate and Consent to Disclose Taxpayer Information to the TPP TFRP ADR program analyst.

  8. The mediation session will occur as soon as practical but no more than 60 days after the Agreement to Mediate is signed by both parties. See section 6.01 of Revenue Procedure 2009-44.

  9. Per section 8.04 of Revenue Procedure 2009-44, Appeals may withdraw from the mediation process if the taxpayer is unable to adhere to the above time frames without reasonable cause. See IRM 8.26.10.3.2.5 for additional details on withdrawing from the mediation process.

8.26.10.3.2.4.2  (10-01-2012)
Participants in TFRP Mediation

  1. The taxpayer and Appeals are the parties to the mediation process. Absent standard provisions or an agreement to the contrary, the taxpayer and Appeals must each have at least one participant with decision-making authority attending the mediation session. The decision-maker for Appeals is the ATM.

  2. In addition to the required decision-makers, the taxpayer and Appeals are generally encouraged to include those persons with information and expertise that would be useful to the decision-makers and the mediator. The Agreement to Mediate will set mutually agreed upon limits on the number, identity or participation of participants. Appeals is not required to accept all participants proposed by the taxpayer.

  3. In order to minimize the possibility of a last-minute disqualification of the mediator, the taxpayer and Appeals must notify the mediator and the other party of the participants on their mediation team no later than two (2) weeks before the mediation session.

  4. See Exhibit 8.26.10-4 for a Model Participants List. The same Model Participants List is available as a Word document on the Post-Appeals Mediation (Collection Cases) web page.

8.26.10.3.2.4.3  (10-01-2012)
Selection of Appeals Mediator

  1. Post-Appeals mediation requires the use of an Appeals employee who is trained as a mediator. The parties will discuss selection of the Appeals mediator during the pre-mediation conference call described above. See IRM 8.26.10.3.2.4.

  2. The taxpayer and the ATM will select the Appeals mediator from a list of eligible persons, which may be obtained from the Appeals ADR web page or the TPP TFRP ADR program analyst. The Appeals mediator may be from the same Appeals office or geographical area where the case is assigned, but not from the same team or group (see section 7.01 of Revenue Procedure 2009-44. The purpose of this is to avoid a situation where the decision-maker for Appeals is also the supervisor of the Appeals mediator.

  3. The mediator may be an appeals officer or a settlement officer who is trained in mediation techniques.

  4. Appeals is responsible for all costs associated with the Appeals mediator.

  5. Due to the fact that the Appeals mediator is an IRS employee, he or she will provide the taxpayer with a written statement confirming:

    1. His or her proposed service as a mediator,

    2. That he or she is a current IRS employee,

    3. That he or she has received training emphasizing his or her role as a fair and impartial participant in the mediation process,

    4. That an inherent conflict or perception of an inherent conflict results from his or her continued status as an IRS employee, and

    5. That this will not interfere in his or her ability to impartially facilitate mediation of the case

      Note:

      See Exhibit 8.26.10-5 for a Model Impartiality Affirmation Statement for Appeals Mediators and Arbitrators. The Impartiality Affirmation Statement is also available as a Word document on the Post-Appeals Mediation (Collection Cases) web page.

8.26.10.3.2.4.4  (10-01-2012)
Selection of Non-IRS Co-Mediator

  1. As indicated in the previous section, PAM requires the use of an Appeals employee as the mediator in every case. However, the taxpayer may also elect to also use the services of a non-IRS co-mediator. The taxpayer and the ATM should make the selection of a non-IRS co-mediator from any local or national organization that provides a roster of neutrals. Criteria for selecting the non-IRS co-mediator may include:

    • Completion of mediation training,

    • Previous mediation experience, or

    • A substantive knowledge of TFRP tax and case law or TFRP policies and procedures

  2. Section 10.03 of Revenue Procedure 2009-44 contains details concerning the disqualification of the non-IRS co-mediator from representing the taxpayer before IRS in any pending or future action that involves the issues that are the subject of the mediation and the extent to which the non-IRS co-mediator's firm (if any) will be disqualified.

  3. The taxpayer is solely responsible for all costs and expenses associated with the non-IRS co-mediator.

  4. Review sections 7.01 and 10.03 of Revenue Procedure 2009-44 for further provisions on non-IRS co-mediators.

8.26.10.3.2.4.5  (10-01-2012)
Discussion Summary (TFRP Mediation)

  1. The taxpayer and Appeals will each prepare a discussion summary of the issues for consideration by the mediator. The discussion summary should include arguments in support of the party's position and how that position impacts both the overall determination of liability under IRC 6672 and the TFRP amount. The discussion summary provided by the SO should also include a complete TFRP calculation.

  2. Per section 8.01 of Rev. Proc. 2009-44, the taxpayer and Appeals must submit their respective discussion summaries to the mediator and each other no later than two (2) weeks prior to the scheduled mediation session.

8.26.10.3.2.4.6  (10-01-2012)
Confidentiality

  1. The mediation process is confidential, so information concerning any dispute resolution communication is confidential and may not be disclosed by any party, participant, observer or mediator except as provided by statute, such as in IRC 6103 and 5. U.S.C. section 574. Returns and return information may only be disclosed pursuant to IRC 6103.

    Note:

    A dispute resolution communication includes all oral and written communication prepared for the purposes of a dispute resolution proceeding, which includes post-Appeals mediation. See 5. U.S.C. section 571(5).

  2. In executing (signing) the Consent to Disclose Tax Information, the taxpayer consents under IRC 6103(c) to the disclosure by the IRS of his/her return and "return information" (as defined by IRC 6103(b)(2)) incident to the mediation to the mediator and any participants or observers identified in writing in the initial list of participants and to any subsequent participants or observers identified in writing by the parties.

  3. If the Consent to Disclose Tax Information is signed by a person pursuant to a power of attorney , that power of attorney must specifically state that the taxpayer has authorized the power of attorney to, in turn, authorize IRS to disclose the taxpayer's return and return information to third parties.

    Caution:

    The Form 2848, Power of Attorney and Declaration of Representative, does not authorize a representative to execute consents that will allow the IRS to disclose tax return or return information to a third party unless this authority is specifically delegated to the representative in section 5 of the Form. If this authority is not specifically delegated to the representative in section 5 of Form 2848, the Agreement to Mediate must be signed by the taxpayer(s).

  4. A copy of the power of attorney (Form 2848) must be attached to the Agreement to Mediate.

  5. Confidentiality and disclosure provisions of the Internal Revenue Code, including IRC 6103, IRC 7213, and IRC 7431 apply to:

    • IRS and Treasury employees who participate in or observe the mediation process in any way, and

    • Any person invited by IRS to participate or observe who is under contract to the IRS pursuant to IRC 6103(n)

  6. The required consent provisions are in the Consent to Disclose Tax Information and the required confidentiality provisions are stated in the Agreement to Mediate.

8.26.10.3.2.4.7  (10-01-2012)
Ex Parte Communication (TFRP Mediation)

  1. Unsolicited ex parte contact with the mediator by either party outside of the mediation session is prohibited. This ensures the mediator does not receive information of which the other party may be unaware and thus unable to respond or rebut.

  2. The prohibition against ex parte communication does not preclude the mediator from contacting a party, or preclude the contacted party from responding to a question or request posed by the mediator. Supplemental information submitted to the mediator must be concurrently shared with the other party.

    Example:

    The taxpayer and Appeals submitted their respective discussion summaries to the mediator and the other party on May 9. The mediation session is scheduled for May 28. Upon receiving and reviewing the taxpayer's discussion summary, the settlement officer believes the taxpayer misrepresented an important fact and wants to talk with the mediator about the matter before the mediation session. The settlement officer is precluded from initiating ex parte contact with the mediator in this instance.

    Example:

    Same facts as above except that upon reviewing both discussion summaries, the mediator wants some additional documentation that was mentioned in the settlement officer's summary. The mediator may contact either party to ask questions or request additional information without violating the ex parte contact provisions. The supplemental information provided by the settlement officer to the mediator in this instance must be concurrently sent to the taxpayer.

8.26.10.3.2.5  (10-01-2012)
Withdrawal - Mediation

  1. Either party may withdraw from the mediation process any time by notifying the other party and the mediator in writing. See section 8.04 of Revenue Procedure 2009-44.

  2. As indicated in IRM 8.26.10.3.2.4.1, Appeals may withdraw from the mediation process if the taxpayer is unable to adhere to time frames without reasonable cause.

    Example:

    Appeals received a request for mediation on July 9 and agreed to mediate on July 16. The Agreement to Mediate was signed on July 25. The parties agreed to August 19 for the date of the mediation session, meaning each party must submit their respective Mediation Participants Lists and Discussion Summaries to the mediator and the other party no later than August 5. Appeals submitted its required documents on July 31. On August 4, the settlement officer contacted the POA regarding the taxpayer's Participants List and Discussion Summary. She indicated she forgot and assured Appeals she would have them in the mail that day. On August 11, the ATM contacted the POA again about the required documents. She said she got tied up with other matters but was almost done and would just bring them to the August 19 mediation session. The ATM discussed the matter first with the TPP TFRP ADR program analyst and then with the Area Director. The ATM then advised the POA that Appeals was withdrawing from the mediation process because she did not adhere to the required time frames. The ATM notified the mediator, the Area Director and the TPP TFRP ADR program analyst. The settlement officer closed out the case by sustaining assessment of the proposed TFRP.

  3. The SO inputs ACDS Action Code 'MO' on the date either Appeals or the taxpayer withdraws from the mediation process.

8.26.10.3.2.6  (10-01-2012)
Mediator's Report (TFRP)

  1. At the conclusion of the mediation process, the mediator will prepare a brief written report summarizing the disputed issues and the agreements reached, if any. See Exhibit 8.26.10-6 for a Model Mediator's Report - TFRP. The same Model Mediator's Report is available as a Word document on the Post-Appeals Mediation (Collection Cases) web page.

  2. The report must be prepared regardless of the outcome of the mediation. If an agreement on a disputed issue is reached through mediation, it is important for the Mediator's Report to accurately reflect the details of the agreement, and more specifically the agreed upon amount as it relates to the overall computation of reasonable collection potential. The report must be signed by each party and the mediator.

  3. A copy of the report must be sent to the TPP TFRP ADR program analyst by mediator or the ATM or SO whose case was mediated.

8.26.10.3.2.7  (10-01-2012)
Appeals Procedures Apply (Mediation)

  1. At the conclusion of the mediation session, the SO inputs ACDS Action Code 'MO' (mediation out) to the WUNO.

  2. If Appeals and the taxpayer reach an agreement on some or all of the disputed issues through the mediation process resulting in an agreement on an acceptable TFRP amount, the SO will prepare the appropriate Form 2751, Proposed Assessment of Trust Fund Recovery Penalty or Form 2751-AD, Trust Fund Recovery Penalty-Offer of Agreement to Assessment and Collection. A Form 866, Agreement to Final Determination of Tax Liability, may also be necessary. See IRM 8.25.2 for additional information on the proper agreement form. The TPP TFRP ADR program analysts will assist the SO and ATM with issues and questions concerning closing agreements for TFRP cases.

    Note:

    The ATM's signature on either a Form 866orForm 5402 is considered a “final administrative determination” under IRC 6672(b)(3)(B). If the ASED is suspended by TBOR2 and a Form 866 or other closing agreement is secured, the date the ATM signs such closing agreement is the starting date of the 30-day period within which IRS must assess the TFRP, not the date the ATM signs the Form 5402. For example, if the closing agreement is signed by both parties at the mediation session on September 6, the SO writes up her closing documents on September 8, and the ATM signs the Form 5402 on September 9, IRS has until October 6 (not October 9) to assess the TFRP under TBOR2.

  3. If possible or practical, prepare the appropriate Form 866 and/or Form 2751, and ask the taxpayer to sign the document(s) while the parties are still gathered at the mediation session.

  4. Appeals will use established procedures to close out the case. See IRM 8.25.2 and IRM 8.25.3 for general procedures for closing out a TFRP case. Note: If a Form 866 closing agreement is secured, make sure the parties to the mediation are aware that it's content must be reviewed and approved by the appropriate Appeals person.

  5. If Appeals and the taxpayer do not reach an agreement on an issue being mediated, Appeals will not reconsider the mediated issue and will proceed with closing out the case by sustaining IRS's proposed assessment of the TFRP using established closing procedures.

8.26.10.3.2.8  (10-01-2012)
Tracking Time

  1. The SO will input the following to the WUNO:

    Action Code When Input
    MI The date the request for mediation is received
    MO Whenever one of the following occurs:
    • The date the mediation denial letter is issued

    • The date the taxpayer or Appeals withdraws from the mediation process

    • At the conclusion of the mediation session

  2. For purposes of accurately tracking the amount of direct time on Appeals cases, Appeals mediators will be assigned as a Team Member on the mediation case.

  3. Once the name of the Appeals mediator is known, the ATM of the SO whose case is being mediated will request input of the following through APS:

    1. Feature Code 'TL' to create the Team Leader record for the SO of the source case, and

    2. Feature Code 'TM' to create the Team Member record for the Appeals mediator

  4. The SO whose case is being mediated is responsible for verifying that APS follows the input procedures in IRM 8.7.11.4,, Working Appeals Team Cases, Receipt and Control of Cases by Account and Processing Support (APS).

Exhibit 8.26.10-1 
Post-Appeals Mediation Process Action Steps - TFRP

Post-Appeals Mediation Process Action Steps - TFRP
Introduction The purpose of this document is to summarize the action steps needed to navigate through the post-Appeals mediation process for Trust Fund Recovery Penalty (TFRP) cases.

Note:

This document is not a substitute for IRM 8.26.10. Post-Appeals mediation is simply part of the overall Appeals process, so Appeals technical employees and Appeals Team Managers must be familiar with the procedures outlined in Revenue Procedure 2009.44, Announcement 2011-6 and the IRM.

 
Processing Mediation Request Below are the actions needed after receipt of a complete and timely written request for mediation up through the point at which a decision is made to approve or deny:
  Step Who Action
  1 SO If the mediation request was mailed directly to the SO, promptly inform the ATM.
  2 SO Email or fax a copy of the full written request for mediation to the TPP TFRP ADR program analyst.

Reminder:

Forward a copy of the mediation request to TPP even if it’s late, incomplete, or premature.

  3 SO Input ACDS/CARATS Action Code ‘MI’ (mediation in) to the WUNO. If there are multiple WUNOs, input Action Code ‘MI’ to all WUNOs. The ‘MI’ Action Code automatically inputs the ‘MD’ feature code. See IRM 8.26.10.3.2.2.
  4 TPP The TPP TFRP ADR program analyst will initiate contact with the ATM and SO to schedule a time to discuss the case’s mediation eligibility.
 

Note:

See IRM 8.26.10.3.2 (6) and (7) for guidance on what to do when the request for mediation is either premature or incomplete.

 
Mediation Request Denied The below actions are needed after deciding to deny the mediation request (see IRM 8.26.10.3.2.3):
  Section 5.03 of Revenue Procedure 2009-44 states the ATM will respond to the taxpayer within two (2) weeks of receiving the request for mediation.
  Step Who Action
  1 SO & ATM The SO will prepare and the ATM will sign a letter denying the mediation request.
  2 SO Email or fax a copy of the denial letter to the TPP TFRP ADR program analyst.
  3 SO Input ACDS/CARATS Action Code ‘MO’ (mediation out).

Note:

Action Code ‘MO’ must be input to enable 'AC-FR.'

  4 SO The TPP TFRP ADR program analyst will initiate contact with the ATM and SO to schedule a time to discuss the case’s mediation eligibility.
  The taxpayer may request a conference with the ATM to discuss the denial, but the decision is not subject to further review. See section 5.03 (2) of Revenue Procedure 2009-44.
 

Note:

The ATM has the authority to deny a request for mediation. See IRM 8.26.10.3.2.1 (3).

 
Mediation Request Approved Below are the actions needed after the Area Director approves the mediation request up through the time of the mediation session:
  Prior to the Pre-Mediation Conference Call
  Step Who Action
  1 ATM After the mediation is approved by the Area Director, the ATM will promptly notify the taxpayer, the SO and the TPP TFRP ADR program analyst.
  2 SO The SO and ATM will contact the TPP TFRP ADR program analyst to find out when he/she is available to conduct the pre-mediation conference call. (See IRM 8.26.10.3.2.4 (1) for details about the purpose of the pre-mediation conference call.)
  3 SO After finding out some available dates from the ATM and the TPP TFRP ADR program analyst, the SO will contact the taxpayer/POA to schedule the pre-mediation conference call and notify the TPP TFRP ADR program analyst of the final date and time selected.
  4 TPP The TPP TFRP ADR program analyst will initiate and conduct the pre-mediation conference call. At the call, the ATM and the taxpayer will agree to the issue(s) to be mediated and some dates for the mediation session.

Note:

Section 6.01 of Revenue Procedure 2009-44 states the Agreement to Mediate will be completed and signed by both parties within three (3) weeks after the ATM notifies the taxpayer of the mediation’s approval.

  After the Pre-Mediation Conference Call
  Step Who Action
  5 TPP Immediately after the pre-mediation conference call, the TPP TFRP ADR program analyst will prepare drafts of the Agreement to Mediate, Mediation Participants List and Consent to Disclose Tax Information and email them to the ATM & SO.
  6 ATM The ATM and SO will review the draft of the Agreement to Mediate to make sure it accurately captures the issue(s) to be mediated and follow up with the TPP TFRP ADR program analyst on any necessary changes.
  7 ATM Once the ATM and SO are satisfied with the draft of the Agreement to Mediate, the ATM will sign the Agreement on behalf of Appeals. Fax the following to the taxpayer/POA for the taxpayer’s signature:
  • Agreement to Mediate

  • Consent to Disclose Tax Information

Give the taxpayer no more than seven (7) days to return the signed Agreement and Consent and advise that Appeals may withdraw from mediation if taxpayer doesn’t respond by the deadline. See IRM 8.26.10.3.2.4.1 (10).
  8 ALL Mediation should take place no more than 60 days after the Agreement to Mediate is signed. See Section 6.01 of Revenue Procedure 2009-44 .
  9 ATM The ATM will promptly work with other ATMs in the office to secure a mediator based on the dates for the mediation session agreed to at the pre-mediation conference call.
  10 ATM Once the mediator is named, the ATM will work with APS to establish a Team Leader record for the SO’s WUNO and a Team Member WUNO for the mediator. See IRM 8.26.10.3.2.8.
  Preparing for the Mediation Session
  Step Who Action
  11 SO The SO will prepare a Discussion Summary detailing Appeals’ position on the issue(s) to be mediated and provide it and a copy of the Mediation Participant’s List for Appeals concurrently to the mediator and the taxpayer no less than two (2) weeks prior to the date of the mediation session. See IRM 8.26.10.3.2.4.5

Note:

The taxpayer must provide the same. It is the SO’s responsibility to follow up with the taxpayer if such documents are not received within the prescribed time frame.

  12 SO In advance of the mediation session, the SO should prepare the appropriate agreement form(s) with the final amount(s) left blank. If an agreement is reached at mediation, the taxpayer can sign the agreement form(s) while the parties are at the table. See IRM 8.26.10.3.2.7.
  13 ATM The ATM must be prepared to offer a brief opening statement at the mediation session.
 
Post Mediation Session Actions Below are the actions needed after the mediation session is concluded:
  Step Who Action
  1 SO SO inputs ACDS/CARATS Action Code ‘MO’ (mediation out). See IRM 8.26.10.3.2.7 and IRM 8.26.10.3.2.8.
  2 SO & ATM The SO and ATM must each send an email to the TPP TFRP ADR program analyst with an estimate of the hours they spent on the mediation process from the time the written request for mediation was received through the conclusion of the mediation session.

Note:

The SO’s estimate of hours spent on mediation should not include time spent preparing closing documents because that must be done regardless of mediation.

  3 SO Close the case using standard Appeals procedures based on the outcome of the mediation. See IRM 8.26.10.3.2.7

Note:

The ATM’s signature on the Form 866 is considered a “final administrative determination” under IRC 6672(b)(3)(B). If the ASED is suspended by TBOR2 and a Form 866 is secured, the starting date of the 30-day period within which IRS must assess the TFRP is the date the ATM signs the Form 866.

.
  4 SO Resolution Reason Descriptions (RRDs) to use on Form 5402:
  • IF an agreement is reached through mediation, THEN use RRD "Alternative Dispute Resolution (ADR) settlement signed"

  • IF no agreement is reached through mediation, THEN use RRD "Alternative Dispute Resolution (ADR) - No agreement"

 

Exhibit 8.26.10-2 
Model Agreement to Mediate - TFRP

Agreement to Mediate - TFRP
1. The Mediation Process
  The mediation will be an extension of the Appeals process to help [NAME OF TAXPAYER] and the Internal Revenue Service (IRS) - Appeals (the PARTIES) reach a negotiated settlement of the issues to be mediated. See (2) below for the participants in the mediation process. To accomplish this goal, the mediator will act as a facilitator, assist in the defining of the issues, and promote settlement negotiations between the PARTIES. The mediator will inform and discuss with the PARTIES the rules and procedures pertaining to the mediation process. The mediator will not have settlement authority and will not render a decision regarding any issue in dispute. The PARTIES will continue to have settlement authority for all issues considered under the mediation process.
2. Nature of Process, Participants, Withdrawal.
  (a) The mediation process is optional.
  (b) Each PARTY must have at least one participant attending the mediation session with decision-making authority. No later than two (2) weeks before the mediation, each PARTY will submit to the other PARTY and the mediator a list of the participants who will attend the mediation session on behalf of or at the request of the PARTY, including a designation of the person(s) with decision-making authority who will represent the PARTY at the mediation session. Each PARTY’s list of participants will contain the participant’s name, the participant’s position with the PARTY or other affiliation (e.g., a member of the XYZ law firm, counsel to the taxpayer), and the participant’s address (telephone number and fax number). All participants attending the mediation on behalf of or at the request of a PARTY will be listed on the PARTY’s list of participants, including witnesses, consultants and attorneys.

[Insert limitations on the number or types of participants, if any.]
  (c) Either PARTY may withdraw from the process at any time prior to reaching a settlement of the issues to be mediated by notifying the other PARTY and the mediator in writing.
3. Selection of Mediator and Costs.
  (a) Appeals will pay the costs associated with the Appeals mediator. The taxpayer will pay the cost of a non-IRS co-mediator.
  (b) The taxpayer, by signing this agreement, acknowledges that (i) the Appeals mediator is a current employee of the IRS, (ii) a conflict results from his or her continued status as an IRS employee, and (iii) this conflict will not interfere in the mediator's ability to facilitate the case impartially.
4. Issues to be Mediated.
  The mediation session will encompass the following issues in the Trust Fund Recovery Penalty matter of [NAME OF TAXPAYER] for tax periods ended [ENTER TAX PERIODS]:
  (a) [ Issue #1 ]
  (b) [ Issue #2 ]
5. Submission of Materials.
  Each PARTY will present to the mediator a separate written summation not to exceed 20 pages (exclusive of exhibits consisting of pre-existing documents and reports) regarding each issue. The mediator will have the right to ask either PARTY for additional information before the mediation session if deemed necessary for a full understanding of the issues to be mediated. Each PARTY will simultaneously submit to the other PARTY a copy of any submission to the mediator.
6. Place of Mediation.
  The mediation session will take place at either the Appeals office where the case was considered or the Appeals office where the Appeals Team Manager is located.
7. Proposed Schedule.
  Subject to the approval of the mediator, the mediation session will be conducted according to the following schedule:
    Submission of Materials to Mediator: A date no later than two weeks prior to the date of the mediation session.
    Mediation Session : By (10-01-2012)
8. Confidentiality.
  IRS and Treasury employees who participate in or observe the mediation process in any way, and any person under contract to the IRS pursuant to section 6103(n) of the Internal Revenue code, including the mediator, that the IRS invites to participate or observe, will be subject to the confidentiality and disclosure provisions of the Internal Revenue Code, including sections 6103, 7213 and 7431. See also 5 U.S.C. 574.
9. Ex Parte Contacts Prohibited.
  There will be no ex parte contacts from a PARTY to the mediator outside the mediation session. This provision is not intended to prevent the mediator from contacting a PARTY, or a PARTY from responding to the mediator’s request for information.
10. Section 7214(a)(8) Disclosure.
  The PARTIES to this agreement acknowledge that IRS employees involved in this mediation are bound by the section 7214(a)(8) disclosure requirements concerning violations of any revenue law.
11. No Record.
  There will be no stenographic record, no audio or video tape recording or other transcript of the mediation session(s).
12. Report by Mediator.
  At the conclusion of the mediation session, the mediator will issue a brief report to the PARTIES identifying each issue described in section 4, above, and whether the PARTIES either agreed to resolve or did not resolve the issue.
13. Appeals Procedures Apply.
  If the mediation process enables the PARTIES to reach agreement on the issues, Appeals will use established procedures to close the case. If the parties do not reach an agreement on an issue being mediated, the parties may request arbitration for the issue, provided the mediation issue meets the requirements for arbitration. See Announcement 2011-6 and Rev. Proc. 2006-44, 2006-44 I.R.B. 800, or any subsequent procedure. If arbitration is not requested or approved, Appeals will not reconsider the mediated issue(s), and will proceed with closing out the case by sustaining IRS's proposed assessment of the Trust Fund Recovery Penalty.
14. Precedential Use.
  A settlement reached by the PARTIES through mediation will not be binding on the parties (or be otherwise controlling) for taxable years not covered by the agreement. Except as provided in the agreement, any PARTY may not use such settlement as precedent.
 
  INTERNAL REVENUE SERVICE - OFFICE OF APPEALS
   
  Title: Appeals Team Manager
  Date: ______________________________
   
  NAME OF TAXPAYER
  By: _______________________________
  NAME:
  Title
  Date: _____________________________

Exhibit 8.26.10-3 
Consent to Disclose Tax Information

Consent to Disclose Tax Information
Pursuant to section 6103(c) of the Internal Revenue Code of 1986 (as amended), I hereby consent to the disclosure of return information (as defined by section 6103(b)(2) relating to the mediation session between _______________(Taxpayer) and the Commissioner of Internal Revenue to be held on ____________ (date), as follows:
The Internal Revenue Service may disclose the taxpayer's return information incident to the mediation to the mediator and any participants or observers identified in the initial list of participants and to any subsequent participants and observers identified in writing by the parties.
This consent relates to the mediation session that is the subject of an agreement to mediate dated _______________. I am aware that in the absence of this authorization, the return information of _____________ (Taxpayer) is confidential and may not be disclosed except as authorized by the Internal Revenue Code.
I certify that I have the authority to execute this consent on behalf of the taxpayer.
Taxpayer Name: _______________________
Taxpayer Identification Number: ___________
Taxpayer Address: _____________________
By: [ Name of Individual Executing Consent ]
Title: [ Title of Individual Executing Consent ]
Signature: ___________________________
Date: _______________________________

Exhibit 8.26.10-4 
Model Mediation Participants List - TFRP

Mediation Participants List
Case Name:
Submitted By:
Date:
Please list below all participants attending the mediation session, including witnesses, consultants, and attorneys. This form must be sent to the other PARTY and to the mediator(s) no later than two (2) weeks before the mediation session. Insert an asterisk (*) before the name of the person who has decision-making authority at the mediation session:
Name Position or Affiliation Address Telephone & Fax Numbers
       
       

Exhibit 8.26.10-5 
Model Impartiality Affirmation Statement for Appeals Mediators

Impartiality Affirmation Statement
I, [ ENTER APPEALS MEDIATOR'S NAME ], confirm my proposed service as a mediator in the case of [ ENTER TAXPAYER'S NAME ]. I am required to inform you that although I have received training emphasizing my role as a fair and impartial participant in this mediation process, I am still an IRS employee. Although my continued status as an IRS employee creates an inherent or the perception of an inherent conflict, it will not interfere with my ability to be impartial in this case.
   
Dated this________ day of_________________________
_______________________________
/s/ Mediator

Exhibit 8.26.10-6 
Model Mediator's Report - TFRP

Model Mediator's Report
The parties below agreed to mediate their dispute and attended a mediation session on MONTH, DAY, YEAR in an attempt to settle the following issue(s):
Issue 1:  
Settlement: [ ] Yes
  [ ] No
  [ ] Partial
Issue 2:  
Settlement: [ ] Yes
  [ ] No
  [ ] Partial
   
  Per Appeals Prior Per Taxpayer Prior Agreement
Mediated Issue to Mediation to Mediation through Mediation
1. (e.g., Willfulness during the quarterly periods ended 12/31/2006 through 3/31/2008) $ $ $
2. (e.g., Designation under IRM 5.7.4.3 of the Federal Tax Deposits listed in the attached Schedule A) $ $ $
       
Settlement documents will be prepared under established Appeals procedures.
       
Dated this________ day of_________________________
_______________________________
/s/ Mediator
_______________________________
/s/ Party      
_______________________________
/s/ Party      

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