How the IRS Is Trying to Encourage Taxpayer Buy-In Post-Appeal Mediation

By Lingxi Qu

With the 2025 tax return season underway, taxpayers may have dispute resolution options if tax-related disagreements with the IRS occur. Before pursuing litigation, taxpayers can pursue several dispute-resolution options provided by the IRS, including fast track (“FTS”), early referral, and post-appeals mediation.[1] Choosing an appropriate program depends on the status of the disputes and who is currently managing your case.[2] When taxpayers have ordinary unsuccessful appeals negotiations, they can file a request to the IRS Independent Office of Appeals for a non-binding mediation. [3] This will allow a neutral third-party to facilitate conversations between parties without experiencing costly and exhaustive litigation, known as post-appeals mediation (“PAM”). 

According to a report released by the United States Government Accountability Office (“GAO”), the IRS offers six alternative dispute resolution (“ADR”) programs intended for taxpayers to speed up case resolution and get taxes owed to be paid more efficiently.[4] However, ADR was used in less than 0.5% of all cases reviewed by the IRS Independent Office of Appeals from 2013-2022 fiscal years.[5] Over the same period, the use of ADR programs fell by 65%.[6] In response, the GAO made several recommendations to the IRS to improve taxpayers’ experiences with ADR and strengthen program performance.[7] However, recently, the trajectory has reversed. The National Taxpayer Advocate noted that from 2023 to 2024, the IRS has made a substantial effort to increase PAM case receipts, increasing by 110%, yielding more expedited case resolutions.[8]

To further promote the application of PAM, the IRS Independent Office of Appeals launched a Post Appeals Mediation pilot program.[9] This two-year pilot program was designed to make PAM “more attractive to taxpayers.[10] This pilot program leaves the core aspects of PAM unchanged, but instead allows the cases to be reassigned to another appeals team to represent the appeals during the mediation process.[11] This change was mainly made to ensure the case can be reviewed through a different lens, making the PAM more desirable to taxpayers.[12] A separate appeals team means a second chance to go through the appeals process without being influenced by the impression of prior unsuccessful settlement. Moreover, since the new appeals team did not participate in the prior negotiations, [13] its members can treat the taxpayer’s case without any prejudice, and potentially be more willing to explore alternative settlement options that satisfy both sides. For taxpayers, knowing that a PAM proceeding involves two fresh participants, the neutral mediator and a newly assigned appeals team, will give them more confidence in the mediation process as it represents a genuine re-evaluation of the merits and a greater chance that their position will be fully heard and understood this time, making the PAM option more appealing to them.

In 2024, the IRS inaugurated three pilot programs to expand the scope and availability of its ADR processes to taxpayers, including the launching of Last Chance Fast Track Settlement, which is designed to increase the awareness of the FTS option.[14] By promoting various ADR programs tailored to taxpayers’ needs and making structural changes to optimize resolution procedures, the IRS is sending a strong, clear message to encourage taxpayers to resolve their disputes effectively and efficiently before going to court.[15]

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[1] IRS Independent Office of Appeals Starts Post Appeals Mediation Pilot Program, Internal Revenue Serv. (Oct. 1, 2025), https://www.irs.gov/newsroom/irs-independent-office-of-appeals-starts-post-appeals-mediation-pilot-program [https://perma.cc/VWE5-8L8Q].

[2] Appeals Mediation—Alternative Dispute Resolution (ADR), Internal Revenue Serv. (July 15, 2025), https://www.irs.gov/appeals/appeals-mediation-programs [https://perma.cc/FDV2-RHAL].

[3] Taxpayers Can Appeal When They Disagree with an IRS Decision, Internal Revenue Serv. (June 12, 2023), https://www.irs.gov/newsroom/taxpayers-can-appeal-when-they-disagree-with-an-irs-decision [https://perma.cc/SQ7B-CNSE]; Elizabeth P. Askey et al., IRS Issues Interim Guidance for Post-Appeals Mediation Pilot Program, Skadden (Oct. 8, 2025), https://www.skadden.com/insights/publications/2025/10/irs-issues-interim-guidance [https://perma.cc/K34Q-HZHR].

[4] IRS Could Better Manage Alternative Dispute Resolution Programs to Maximize Benefits, U.S. Gov’t Accountability Off. (May 31, 2023), https://www.gao.gov/products/gao-23-105552 [https://perma.cc/W2JV-CFAV].

[5] Id.

[6] Id. While the IRS does not have a definitive explanation for why ADR usage declined, “potential reasons include that taxpayers do not perceive the benefits of using ADR, according to IRS officials.” Id.

[7] See id.

[8] Appeals Improves Alternative Dispute Resolution Programs, but Barriers Remain, Nat’l Taxpayer Advoc. (May 22, 2025), https://www.taxpayeradvocate.irs.gov/news/nta-blog/appeals-improves-adr-programs-but-barriers-remain/2025/05/ [https://perma.cc/KT73-VQW8].

[9] IRS Independent Office of Appeals Starts Post Appeals Mediation Pilot Program, supra note 1.

[10] Id.

[11] Id.

[12] Id.

[13] See id.

[14] See Sharon Katz-Pearlman, IRS Pilots New Alternative Dispute Resolution Procedures, Greenberg Traurig (Jan. 27, 2025), https://www.gtlaw.com/en/insights/2025/1/irs-pilots-new-alternative-dispute-resolution-procedures [https://perma.cc/Y3DU-C6H4].

[15] See New Post Appeals Mediation Pilot Program, Crowell & Moring LLP (Oct. 10, 2025), https://www.crowell.com/en/insights/client-alerts/new-post-appeals-mediation-pilot-program [https://perma.cc/T6EQ-CNVF] (“The new PAM pilot comes on the heels of IRS guidance issued in June 2025 emphasizing the availability and benefit of its various settlement initiatives, including PAM and Fast-Track, intended to expedite the resolution process and resolve disputes prior to the onerous and costly litigation process.”).