The Internal Revenue Service has recently announced a nationwide rollout of post-Appeals mediation for Offer in Compromise (OIC) and Trust Fund Recovery Penalty (TFRP) cases. The IRS Office of Appeals originally launched post-Appeals mediation for OIC and TFRP cases as a pilot program available in certain cities in December 2008.
Post-Appeals mediation is available to help resolve disputes after unsuccessful negotiations with the IRS Office of Appeals and is available for both factual and legal issues. The mediator’s role is to assist the parties in reaching their own agreement collaboratively, but the mediator does not have settlement authority over any issue. Appeals Officers trained in mediation techniques will serve as mediators at no cost to taxpayers. Taxpayers also have the option of paying for a qualified non-IRS co-mediator.
Taxpayers or the IRS Office of Appeals may request nonbinding mediation for eligible cases, but the taxpayer may decline the IRS Office of Appeal’s request for mediation. The goal is to complete the process within 90 days after the mediation request is approved.
Eligibility criteria and complete procedures for initiating a post-Appeals mediation request for both examination and collection issues are in Revenue Procedure 2014-63, which will be published in Internal Revenue Bulletin 2014-53 on Dec. 29, 2014.
A report by the Treasury Inspector General for Tax Administration says More IRS Action Sought On Improper Tax Credit Payments
The United States Internal Revenue Service (IRS) is required by law to take action in federal programs identified as being at high risk of improper payments, and it needs to classify the Additional Child Tax Credit (ACTC) as such a program, according to a recent report by the Treasury Inspector General for Tax Administration (TIGTA).Under the Improper Payments Elimination and Recovery Act of 2010, a program is defined as having significant improper payments when they exceed both 2.5 percent of program outlays and USD10m of all program payments made during the fiscal year.
However, while the IRS has developed processes to identify improper Earned Income Tax Credit (EITC) payments and their root causes, estimating that 24 percent of all EITC payments made in the 2013 fiscal year, or USD14.5bn, were paid in error, it has not classified the ACTC as at high risk, even though TIGTA has estimated the potential ACTC improper payment rate for 2013 was up to 30.5 percent. Potential ACTC improper payments could then have totaled up to USD7.1bn.TIGTA pointed out that the EITC and ACTC are both refundable credits designed to help low-income individuals reduce their tax burden, and IRS enforcement data show that the root causes of improper ACTC payments are similar to those of the EITC.
The overall objective of TIGTA’s review was to assess the IRS’s efforts to identify and address the root causes of erroneous EITC and ACTC payments and it found that significant changes in IRS compliance processes would still be necessary to make any significant reduction in improper payments.