IRS News: Multi-factor Authentication
The IRS's Alternative Dispute Resolution (ADR) process is a valuable tool that can help clients resolve disputes more quickly and efficiently than the standard appeals process. The ADR program offers several options for resolving tax controversies, including mediation, arbitration, and the Fast Track Settlement program.
In the mediation process, a neutral third party helps the taxpayer and the IRS reach a mutually acceptable resolution. The mediator does not make decisions but instead facilitates communication and negotiation between the parties. Mediation can be particularly useful in cases where there are factual or legal disagreements, or where the parties have difficulty communicating effectively.
Arbitration is another option available through the ADR program. In this process, a neutral third party hears arguments from both the taxpayer and the IRS and then makes a binding decision on the matter. Arbitration can be a good choice when the parties have reached an impasse and need a final decision to move forward.
The Fast Track Settlement program is designed to help taxpayers resolve disputes quickly, often within 60 days. In this program, a trained mediator works with the taxpayer and the IRS to identify issues, gather information, and explore settlement options. The mediator helps the parties reach a mutually acceptable resolution, which can then be finalized by the IRS.
Despite its benefits, the ADR process has been underutilized by taxpayers, prompting the IRS to explore ways to increase its adoption. A recent report from the IRS noted that the use of the ADR was way below expectations. Tax preparers should educate their clients about the benefits of ADR and encourage them to consider this option when facing a dispute with the IRS.
The ADR process offers several advantages for both taxpayers and the IRS. It allows for a shared resolution, which can lead to increased compliance from both parties. By resolving disputes more quickly and efficiently, the ADR program can also help reduce the backlog of cases in the appeals process, freeing up resources for other important tax administration functions.
As tax preparers, we should be aware of all resolution options available to clients. These may include the Taxpayer Advocate Service, which provides assistance to taxpayers who are experiencing financial hardship or have been unable to resolve their issues through normal IRS channels.
Tax preparers should also stay informed about the IRS's efforts to combat tax fraud and abuse. The Office of Fraud Enforcement works with practitioners and alternate channels to identify and address abusive transactions. By understanding the fine line between fraud and tax planning, tax preparers can help their clients navigate these complex issues and avoid potential pitfalls.
As the IRS continues to digitize its processes and improve its systems, tax preparers must remain vigilant in their efforts to assist clients. By leveraging resources like the Stakeholder Liaison, which offers webinars and support to help practitioners navigate the IRS, tax preparers can better serve their clients and ensure compliance with tax laws and regulations. With a thorough understanding of the ADR program and other resolution options, tax preparers can help their clients resolve disputes efficiently and effectively, while minimizing the stress and uncertainty of the process.
Christine Gervais
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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