The IRS has formed a unit that aims to make it easier to quickly resolve tax disputes without litigation, an effort that will include more outreach on avenues available to taxpayers.
The alternative dispute resolution (ADR) program management office, part of the IRS Independent Office of Appeals, will work to improve existing ADR programs and will pilot changes that allow the Appeals office to resolve disputes earlier in the exam process, the IRS announced in an April 24 release.
Other goals of the unit include clarifying existing guidance and making it easier to access ADR programs, which include fast-track settlement, fast-track mediation and post-appeals mediation. Michael Bailiff, a senior adviser in the IRS Independent Office of Appeals, will direct the office.
The office is expected to increase outreach for ADR options, which have seen a slump in participation in recent years. Use of the programs declined by 65 percent between fiscal 2013 and fiscal 2022, according to a May 2023 report by the Government Accountability Office.
The GAO made a raft of recommendations to improve alternative dispute resolution processes in that report, such as improving data collection on the programs, establishing better objectives and monitoring taxpayer feedback.
The agency reacted to those findings, issuing a request for public comments in July 2023. The National Taxpayers Union Foundation recommended expanding individual eligibility for ADR programs, which are mostly aimed at businesses and self-employed taxpayers.
The National Taxpayer Advocate mentioned in its annual report to Congress the need for improvements to ADR as one of the 10 “most serious problems” facing taxpayers.
“I think a dedicated unit that is focused on piloting different approaches and also expanding access —to different populations—would be a very good thing,” Nina Olson of the Center for Taxpayer Rights told Tax Notes.
Olson, a former national taxpayer advocate and member of Tax Analysts’ board of directors, added that she hopes the office will reach out to tax professionals, including low-income taxpayer clinics, to field suggestions and get a better sense of why participation in ADR programs has dipped.
Commissioner Daniel Werfel said in a press release that the creation of the ADR unit aligns with the agency’s operating plan for use of funding from the Inflation Reduction Act.
One possible roadblock to higher levels of participation in ADR programs has been skepticism from managers in Appeals and the collections division about the merit of the process, according to Darren Guillot of Alliantgroup LP.
Guillot, who retired from the IRS in September 2023, spent over 30 years in the agency, including as the director of field operations in the Independent Office of Appeals and commissioner of the Small Business/Self-Employed division.
