Announcement 95-2: Appeals mediation.

• Position: IRS Appeals Division - Tax Executives Institute IRS Administrative Affairs Committee

On March 1, 1995, Tax Executives Institute submitted the following comments with the Internal Revenue Service on Announcement 95-2, relating to a mediation proposal under consideration by the IRS. The comments, which took the form of a letter to James A. Dougherty, IRS National Director of Appeals, elaborate on comments made by TEI during a February 23 public hearing on the proposal, and address the proposed scope of the mediation procedure, confidentiality concerns, and the future disqualification of the mediator in related matters (among other matters). The Institute's comments were developed under the aegis of the IRS Administrative Affairs Committee whose chair is Robert D. Adams of Halliburton Company. Mr. Adams testified on TEI's behalf at the IRS's February 23 public hearing. The following members of the Institute also contributed to the development of TEI's submission: Robert L. Ashby of Northern Telecom Inc., Robert J. McDonough, Jr. of Haemonetics Corporation, Kelly A. Nall of Electronic Data Systems Corporation, Sandy J. Navin of General Mills, Inc., Robert H. Proehl of BellSouth Corporation, Anthony W. Rackley of The Williams Companies, and Harold N. Weber of General Motors Corporation.

Tax Executives Institute is pleased to offer the following comments on Announcement 95-2, relating to the proposed mediation procedure under consideration in Appeals. The announcement was published in the January 9, 1995, issue of the Internal Revenue Bulletin (1995-2 I.R.B. 59). A public hearing on the procedure was held on February 23, 1995, at which TEI was represented by Robert D. Adams, chair of the Institute's IRS Administrative Affairs Committee.

Introduction

Tax Executives Institute commends the IRS for issuing Announcement 95-2. TEI has long supported Appeals' mission to resolve tax controversies without litigation. We wholeheartedly agree with the IRS that mediation is the logical extension of the Appeals process. Successful mediation should not only reduce the costs of resolving cases, but also engender fewer disputes about implementing settlements. It should also foster mutual respect between the taxpayer and the IRS by keeping the relationship on a more cooperative, less adversarial basis.

The Institute believes mediation should be permitted after good-faith negotiations between the taxpayer and Appeals prove unsuccessful. Mediation - as a last-ditch procedure before litigation - will afford the taxpayer and the IRS one final opportunity to resolve issues. Starting this process before the parties reach the courtroom is surely a victory for sound tax administration. We do not, however, believe that mediation should be viewed as appropriate in every case.

TEI applauds the IRS for moving to make traditional alternative dispute resolution techniques available. The more opportunities taxpayers and the IRS have to resolve their disputes (including refund claims) outside the courtroom, the better. We believe the scope of the mediation procedure should be limited only by the Appeals' mission statement. Hence, we encourage the agency to broaden the scope of the mediation procedure. The IRS should extend mediation to docketed and non-CEP cases and encourage its use in resolving all manner of tax issues, while remaining vigilant that mediation not become just another layer of...