The mediation procedure does not create any special authority for settlement by Appeals. During the mediation process, Appeals is still subject to the procedures that would be applicable if the issue was being considered under the standard Appeals process, including procedures in the Internal Revenue Manual (IRM) and existing published guidance.

Under IRC 6405, the Service is required to report certain refunds and credits to the Joint Committee on Taxation (JCT). Currently the jurisdictional amount is any amount in excess of $2,000,000 ($5,000,000 for corporations).

When the final outcome of a post appeals mediation settlement could potentially result in a refund meeting the jurisdictional requirement and other criteria, Joint Committee procedures must be considered throughout the mediation process.

See IRM 8.7.9, Joint Committee (JC) Cases, for guidance on JC reporting requirements and procedures. See IRM 8.7.9.5.6 for specific instructions regarding closing agreements and their review by the JCT.

Cases/Issues eligible for mediation are:

Cases/Issues not eligible for mediation are:

Where to file. To request mediation, the taxpayer should send a written request to the appropriate Appeals Team Manager (ATM), with a copy to the appropriate Area Director.

Required information. The taxpayer's mediation request should:

Upon receipt of a request for PAM, the ATCL or AO assigned the case will input Action Code MI in CARATS on the date the request is received.

The ATCL or AO will input the Action Code MO in CARATS on the date the PAM denial letter is issued or the PAM session is concluded.

Only one entry of each code will be allowed. Once selected, the code will be grayed out so it cannot be selected again.

If the MD Feature Code has not already been input, the system will automatically update to the MD Feature Code when MI is input.

The system will automatically delete the corresponding system generated feature code if the action code is deleted.

The system will not automatically delete a manually input feature code if the action code is deleted.

The system will allow the ATCL or AO to delete the MD Feature Code and then delete the corresponding MI Action Code. However, if the MO Action Code is also present, it must be deleted before deleting the corresponding MI Action Code.

The system will not allow the input of Action Code AC-FR if the case has Action Code MI without Action Code MO as appropriate. A system message will appear to inform that an MO must be input.

Within five days of receipt of the mediation request, the Appeals Team Manager (ATM) must submit a copy by e-mail to the analyst.

The ATM will confer with the analyst before making the decision to approve or deny the request.

Generally, the ATM will respond to the taxpayer and the Appeals Team Case Leader (ATCL) or Appeals Officer (AO) within two weeks after receiving the request for mediation.

Once the ATM has approved the request to mediate, he or she will schedule a conference or conference call with the taxpayer and the analyst to:

The taxpayer and Appeals will enter into a written agreement to mediate. This agreement may be negotiated during the administrative conference call. Either party may initiate the drafting of the agreement. See IRM 8.26.5.4.3.

The agreement to mediate should:

The Appeals Team Manager (ATM) will request that the analyst review the agreement prior to signing it on Appeals' behalf.

Generally, the agreement to mediate will be completed within three weeks after notification that Appeals has approved the mediation request and the mediation session will occur within 60 days after signing the agreement.

Appeals may withdraw from the mediation process if a taxpayer's inability to adhere to these time frames is without reasonable cause.

The ATM will sign the agreement to mediate on behalf of Appeals.

Once signed by all parties, the ATM will forward a copy of the signed agreement by e-mail to the analyst.

When a taxpayer requests mediation for a Compliance Coordinated Issue (CCI) or an Appeals Coordinated Issue (ACI) where the Appeals Technical Specialist must review and concur with the Appeals Team Case Leader's or Appeals Officer's proposed settlement, Appeals will include the Appeals Technical Specialist on the Appeals mediation team. The Appeals Technical Specialist can participate either in person or by telephone conference.

When Appeals agrees to mediate a CCI or an ACI that requires review and concurrence by the Appeals Technical Specialist, the mediation agreement will provide that the provisions in IRM 8.7.3.4.1, Review and Concurrence - Appeals Technical Specialist Responsibility, apply if there is a disagreement during the mediation between the Appeals Technical Specialist and the Appeals individual with settlement authority.

The taxpayer and Appeals will be the parties to the mediation process. Each party must have at least one participant with decision-making authority attend the mediation session.

The agreement to mediate will set forth the procedures by which the parties inform each other and the mediator of the participants in the mediation and any limitation on the number, identity, or participation of such participants.

In general, the taxpayer and Appeals are encouraged to include in the mediation process, in addition to the required decision-makers, those persons with information and expertise that will be useful to the decision-makers and the mediator.

Appeals has the discretion to communicate ex parte with the Office of Chief Counsel, the originating function (e.g. Compliance), or both in preparation for or during the mediation session.

Appeals also has the discretion to have Counsel, the originating function, or both participate in the mediation proceeding to present the position and views of the Service, and to rebut representations and arguments made by the taxpayer.

In order to minimize the possibility of a last-minute disqualification of the mediator, each party must notify the mediator and the other party of the participants on the party's mediation team no later than two weeks prior to the mediation. See Exhibit 8.26.5-2.

The mediation procedure requires the use of an Appeals employee who is a trained mediator.

The parties will discuss the selection during the conference or conference call. See IRM 8.26.5.4.3.

The Appeals Team Manager (ATM) and the taxpayer will select the Appeals mediator from a list of trained individuals who, generally, will be from the same Appeals office or geographic area where the case is assigned, but not from the same group or team.

Appeals will pay the expenses associated with the Appeals mediator.

In addition to the Appeals mediator, the taxpayer may elect to use a non-IRS co-mediator. If so, the taxpayer and the Appeals Team Manager (ATM) should make the selection from any local or national organization that provides a roster of neutrals or contact the analyst for additional guidance.

The taxpayer will pay the expenses associated with a non-IRS co-mediator.

Criteria for selecting a non-IRS co-mediator may include:

An individual is not eligible to be a non-IRS co-mediator if the individual has an official, financial, or personal conflict of interest with respect to the parties, unless such interest is fully disclosed in writing to the taxpayer and the ATM and they agree that the mediator may serve. See 5 U.S.C. section 573.

The taxpayer and Appeals will each prepare a discussion summary of the issue(s) (including their arguments in favor of their positions) for consideration by the mediator(s). Although Paragraph 5 of the Model Agreement (Exhibit 8.26.5-1) specifically states that each party's written summation may not exceed 20 pages, this is merely suggested language and the parties are not bound to that limitation. Rather, the length of the discussion summaries will be mutually agreed upon and included in the agreement to mediate.

The taxpayer and Appeals will submit the discussion summaries to the mediator and each other no later than two weeks before the mediation session is scheduled to begin or as determined in the agreement to mediate.

The mediation process is confidential. Therefore, all information concerning any dispute resolution communication is confidential and may not be disclosed by any party, participant, observer or mediator except as provided by statute, such as IRC 6103 and 5 U.S.C. section 574.

A dispute resolution communication includes all oral or written communications prepared for the purposes of the dispute resolution proceeding.

IRS employees who participate in or observe the mediation process in any way, and any person under contract to the IRS pursuant to IRC 6103(n) that the IRS invites to participate or observe, will be subject to the confidentiality and disclosure provisions of the Internal Revenue Code, including IRC 6103, IRC 7213, and IRC 7431.

To ensure that one party is not in a position to exert undue influence on the mediator, there will be no unsolicited communications or contact with the mediator by the taxpayer or Appeals outside the mediation session.

This prohibition is intended to apply only to unsolicited contacts with the mediator from one of the parties outside the mediation session. It ensures the mediator does not receive information or evidence the other party is unaware of and is unable to respond to or rebut.

This provision does not prevent the mediator from contacting a party outside of the mediation session, or a party from answering a question or request posed by the mediator outside of the mediation session provided that the information furnished to the mediator is made available to both parties so that no party is unaware of or unable to respond to or rebut the information.

Either the taxpayer or Appeals may withdraw from the process anytime before reaching a settlement of the issues being mediated by notifying the other party and the mediator in writing.

Regardless of the outcome and at the conclusion of the mediation process, the mediator will prepare a brief written report and submit a copy to each party and to the analyst. See Exhibit 8.26.5-4.

The Appeals Team Manager (ATM) will ensure that either the mediator or the ATM provides the analyst with an electronic copy of the mediator's report with the results of the mediation session.

If Appeals and the taxpayer reach an agreement on some or all of the issues through the mediation process, Appeals will use established closing procedures including, where appropriate, preparation of Form 906, Closing Agreement on Final Determination Covering Specific Matters. See IRM 8.13.1, Processing Closing Agreements in Appeals, for additional information. See IRM 8.20.7, Closing Procedures, for general case closure instructions. Also see IRM 8.7.9, Joint Committee (JC) Cases.

If Appeals and the taxpayer do not reach an agreement on an issue being mediated, Appeals will not reconsider the mediated issue(s), and a statutory notice of deficiency will be issued with respect to all unagreed issues, or the case will be processed using established closing procedures if there is no deficiency. See IRM 8.2.1.10 , Reaching a Conclusion in the Case. See IRM 8.20.7, Closing Procedures, for general case closing instructions.

For purposes of accurately tracking the amount of direct time on Appeals cases, the Appeals mediator will be assigned as a team member on the mediation case.

The Appeals mediator will request that Account and Processing Support (APS):

The ATCL or AO is responsible for verifying that APS follows the procedures in IRM 8.7.11, Working Appeals Team Cases, in establishing the team member assignment.