IRS Launches New Mediation Pilot Program to Help Businesses Resolve Tax Disputes Faster

The IRS is trying something new to make tax disputes easier for businesses to handle. It recently announced a Post-Appeals Mediation Pilot Program, a two-year test designed to help taxpayers and the IRS settle disagreements more quickly — and without going to court.

For many business owners, IRS disputes can take months or even years to resolve. This new pilot program aims to fix that by giving both sides a chance to work with a neutral mediator before things get too complicated.

What Is the Post-Appeals Mediation Pilot Program?

The Post-Appeals Mediation (PAM) program is being launched by the IRS Independent Office of Appeals. It’s meant to give taxpayers — especially businesses — another chance to reach a fair resolution before taking their disputes to the U.S. Tax Court.

In the pilot program, a neutral mediator helps both the taxpayer and the IRS appeals officer talk through their disagreements. The goal isn’t to pick a winner but to help both sides find common ground.

This process can save time, stress, and money for everyone involved.

Who Can Use the Program?

The pilot is open to business taxpayers who have already gone through the IRS appeals process but still haven’t reached an agreement.

The main requirements are:

• The case must have already been through Appeals review.
• Both the taxpayer and the IRS must agree to mediation.
• The issue must be one that can be settled — not a legal matter that needs a court decision.

If both parties agree, the mediation will be scheduled within the two-year pilot period.

Why the IRS Started This Pilot

The IRS often faces criticism for long delays and complicated processes during tax disputes. Business owners can wait months just to get an update — and even longer for resolution.

This pilot program shows the IRS is trying to modernize its appeals process. By adding mediation, the agency hopes to:

• Speed up resolutions
• Reduce costs for both the IRS and taxpayers
• Build trust by showing willingness to work together

It’s also part of a bigger effort by the IRS Independent Office of Appeals to improve customer experience and transparency.

How the Mediation Process Works

The process is designed to be simple and flexible.

1. Request Mediation:
   After an appeal decision fails to resolve the dispute, either the taxpayer or the IRS can suggest mediation.
2. Select a Mediator:
   A neutral IRS Appeals employee trained in mediation is assigned to the case. Both sides must agree on the mediator.
3. Mediation Session:
   During the session, both parties discuss their positions. The mediator helps them communicate clearly and explore compromise options.
4. Resolution or Closure:
   If both sides agree, they sign a settlement. If not, the case continues to the next step (such as Tax Court).

The key benefit is that nothing discussed during mediation can be used later in court, so it’s a safe space for open discussion.

Benefits for Business Taxpayers

For businesses, the new pilot could be a game changer. Here’s why:

✅ Faster Resolution
Mediation can end disputes in weeks or months instead of years.

✅ Lower Legal Costs
Avoiding court means avoiding large legal fees and lengthy litigation.

✅ Better Communication
Many business owners feel unheard during IRS disputes. Mediation provides a chance to clarify facts directly.

✅ Flexibility
Both sides have more control over the outcome — instead of leaving it to a judge.

✅ Relationship Repair
Working together through mediation can help restore trust between the IRS and business taxpayers.

What This Means for the Future

If the Post-Appeals Mediation Pilot Program succeeds, it could become a permanent feature of the IRS’s dispute resolution system.

Experts believe it might also lead to:

• Expanded mediation for more types of tax cases.
• More private mediators approved to assist with IRS disputes.
• A smoother, less adversarial approach to tax enforcement overall.

The IRS will review the pilot’s results after two years to decide whether to continue or expand it.

What Businesses Should Do Now

If your business has had tax issues with the IRS, now is the time to pay attention to this pilot. Even if your case isn’t eligible yet, the program could soon open wider.

Here are a few smart steps to take:

• Work closely with your tax advisor to understand if mediation could help in the future.
• Keep documentation organized — clean records make mediation smoother.
• Stay informed about IRS policy changes — the agency is evolving quickly under new modernization efforts.

For many businesses, this pilot represents a fresh start — a chance to handle tax problems in a more open, cooperative way.

Final Thoughts

The IRS’s new Post-Appeals Mediation Pilot Program is more than just a test — it’s a step toward a fairer, faster, and more modern tax system.

By giving businesses a way to solve disputes before heading to court, the IRS is showing that it wants to work with taxpayers, not just against them.

If you’re a business owner dealing with complex tax issues, mediation might be the new tool that helps you move forward — and save both time and money.