The new approach to settlement authority in Appeals.

• Author: Dougherty, James A.
• Position: IRS

The mission of the Internal Revenue Service's Appeals organization is "to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer, and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service." Settlement authority is a tool, which allows Appeals to accomplish this mission. In fiscal year 2000, Appeals, Large Business Specialty Program (LBSP) (formerly Appeals, Large and Mid-size Business) resolved 95 percent of the non-docketed cases agreed and 90 percent of the docketed cases agreed.

While these numbers are impressive, Earl Blanche Jr., Director, Appeals, LBSP, is looking for ways to improve these statistics. Furthermore, Mr. Blanche would like to develop a process to empower the parties to resolve cases in a more expeditious manner. We spoke with Mr. Blanche in May 2002 to discuss settlement authority. He explained to us the procedures currently being implemented to improve the Appeals' settlement process. These procedures include a team approach to settlement as well as various other techniques to expedite the process and monitor the status of the cases. In the fall of 2001, Appeals initiated a pilot program changing the settlement authority in some large cases. Prior to this change, Appeals Team Case Leaders had sole settlement authority over cases assigned to them. This article highlights the changes made and outlines the new team settlement approach to large cases with issues selected for this process.

In the past, Appeals used a standard approach to handling large cases. The same process was used in all cases without consideration of the type of issues or the complexity of the case. The Appeals Team Manager reviewed the case and assigned it to an Appeals Team Case Leader who developed a work plan and requested resources. Issues and complexity dictated the resources requested for the case. The Appeals Team Manager reviewed the work plan and assigned team members (Appeals Officers) to the case. The Appeals Team Case Leader was then responsible for assigning the issues to the Appeals Officers. The Appeals Team Case Leader had settlement authority over all issues including those assigned to team members.

While the settlement limits given to the Appeals Team Case Leaders have raised some concerns, there are internal controls in the process to manage the settlement authority. Examples of these controls...