Tax disputes can create stress and uncertainty especially when negotiations with the IRS seem to stall. In Washington, mediation offers a faster, less confrontational path toward resolution: one that saves time and reduces costs compared to lengthy appeals or litigation.
Understanding IRS mediation
IRS mediation is a voluntary and informal process where a neutral mediator helps you and the IRS reach a settlement. It lets both sides communicate directly and find solutions without court pressure.
Mediation is nonbinding so you decide whether to accept any proposed agreement. The IRS offers several mediation programs:
- Fast Track Settlement (FTS): Used during an ongoing examination when both you and the IRS examiner agree to enter the program.
- Post Appeals Mediation (PAM): Used after the Appeals process if settlement efforts fail but both parties still want to avoid court.
You can request mediation during certain stages of a tax dispute. It applies to both examination and collection cases, giving many taxpayers a flexible option.
When mediation makes sense
Mediation works best when both sides face a real factual or legal dispute and want to negotiate in good faith. It’s most effective when the case is close to resolution but a few key issues remain. Consider mediation if:
- You want a faster outcome: FTS cases can often be resolved within 60 days.
- You’ve completed Appeals but want to avoid litigation: PAM offers a last opportunity to settle before court.
- You prefer confidentiality: Discussions during mediation remain private.
- You want to control the result: Neither party is forced to accept a settlement.
Mediation can save time and money. It also encourages open dialogue that may lead to creative solutions unavailable through standard appeals.
Some next steps you can take
Mediation may be informal but it still involves complex tax rules and negotiation strategy. A skilled tax attorney can help you decide if mediation fits your case, prepare your arguments and protect your rights.
Your attorney reviews the IRS’s position, organizes your documentation and advises you before you agree to any settlement terms.