IRS Examination Division

Effective November 18, 2016, Revenue Procedure 2016-57 established the Small Business/Self-Employed (“SB/SE”) Fast Track Mediation Collection (“FTMC”) program to allow taxpayers and the IRS to resolve disputes quickly with an Office of Appeals mediator serving as a neutral third party. The FTMC obsoletes the SB/SE Fast Track Mediation program (“FTM”) (as outlined in Revenue Procedure 2003-41) and will enable taxpayers to settle offer-in-compromise and trust recovery penalty issues quickly.

Participants in the FTM program were taxpayers whose cases were being worked in either Examination or Collection and provided taxpayers the opportunity to expedite resolution of their cases by mediating their disputes with an Appeals mediator acting as a neutral party. However, taxpayer requests for FTM have been infrequent throughout the life of the program and became increasingly so after Fast Track Settlement (“FTS”) was implemented. FTS is only available to taxpayers in Examination and does not provide an expedited Appeals alternative dispute resolution opportunity for taxpayers in Collection.

According to the revenue procedure, the FTMC was created to ensure that taxpayers involved in disputes with Collection will be afforded an early opportunity for expedited resolution of their cases via mediation. The FTMC can only be used when all other collection issues involving the taxpayer have been resolved. The IRS Appeals mediator does not have settlement authority in the FTMC proceeding and cannot render a decision regard any issue in dispute.

Case Eligibility

Appropriate cases for FTMC include:

  • Issues involving the value of a taxpayer’s assets
  • The amount of dissipated assets that should be included in the overall determination of reasonable collection potential
  • Whether the taxpayer meets the criteria for deviation from national and/or local expense standards
  • Determination of a taxpayer’s proportionate interest in jointly held assets
  • Projections of future income based on calculations other than current income
  • The calculation of a taxpayer’s future ability to pay when living expenses are shared with a non-liable person
  • Doubt as to liability cases worked by Collection
  • Other factual determinations, such as whether a taxpayer’s contributions into a retirement savings account are discretionary or mandatory as a condition of employment

Inappropriate cases for FTMC include:

  • Issues requiring assessment of the hazards of litigation or use of the Appeals mediator’s delegated settlement authority
  • Cases referred to the Department of Justice
  • Cases worked at an SB/SE Campus site
  • Collection Appeals Program cases
  • Collection Due Process cases
  • Collection cases in which the taxpayer has failed to respond to IRS communications or failed to submit documentation to Collection for consideration

Application Process

A request for participation in FTMC should be initiated after an issue has been fully developed and before Collection has made a final determination regarding the issue. A Form 13369, Agreement to Mediate, must be signed by the taxpayer and collection group manager to initiate proceedings. The FTMC allows either party to withdraw at any time before reaching an agreement on the issues, and the proceedings will be held at a location mutually agreed to by both parties.

Mediation Session

Both the taxpayer and Collection will be given ample opportunity to present their respective positions. The Appeals mediator may also ask either party for additional information if necessary for a full understanding of the issues being mediated. If it is determined that meaningful progress toward resolution of the issues has stopped, the Appeals mediator may terminate the mediation session. In addition, the Appeals mediator may, but is not required to, terminate or postpone the session if: (a) either party presents new information or new issues during the mediation session; (b) the taxpayer wishes to submit a substantial amount of additional documentary information; (c) the taxpayer wishes to present new witnesses, including experts; or (d) for other good cause.

The Appeals mediator may recommend to the parties a possible resolution of one or all of the issues considered in FTMC based on the Appeals mediator’s analysis of the issues. Any recommendation made by the Appeals mediator does not bind the parties and is not a decision regarding any issue in dispute.

At the conclusion of the mediation session, the Appeals mediator will prepare a brief written report by completing Form 13370, Fast Track Mediator’s Report. A copy of the report is provided to the taxpayer and the Collection Group Manager at the end of the mediation session. If the parties resolve any of the disputed issues during the mediation session, Collection will secure the appropriate closing documents from the taxpayer and close the case. If the parties do not reach an agreement on a mediated issue, FTMC does not eliminate the taxpayer’s opportunity to request a hearing before Appeals through the traditional Appeals process.

In October 2016, the IRS declared that in-person conferences will no longer be the default method for Appeals conferences. The IRS also made several key Collection and Examination policy clarifications to ensure that Compliance functions as the finders of fact and Appeals does not take investigative actions.

Appeals Conferences

Historically, Appeals conferences have, for the most part, been conducted in-person. In an attempt to make the most of its limited resources, IRS Appeals conferences will, as of October 1, 2016, be conducted over the phone unless the taxpayer requests an in-person meeting. The revised procedures in Internal Revenue Manual (“IRM”) 8.6.1 provide that if the taxpayer requests an in-person meeting, it must be approved by the Appeals team manager and should be limited to certain situations including when:

  • There are substantial books and records to review that cannot be easily referenced with page numbers or indices.
  • The Appeals Technical Employee cannot judge the credibility of the taxpayer’s oral testimony without an in-person conference.
  • The taxpayer has special needs (e.g., disability, hearing impairment) that can only be accommodated with an in-person conference.
  • There are numerous conference participants (e.g., witnesses) that create a risk of an unauthorized disclosure or breach of confidentiality.
  • An alternative conference procedure (e.g., Post Appeals Mediation or Rapid Appeals Process) involving separate caucuses will be used.

In addition, language was added to IRM that permits Appeals to invite IRS Chief Counsel and/or Compliance (which includes Examination, Collections, and Accounts Management) to the Appeals conference. However, the IRM notes that the prohibition against ex parte communications must not be violated and thus Appeals still may not communicate with IRS Chief Counsel or Compliance without the taxpayer also being present.

Key Collection Policy Clarifications

The IRS made some key collection policy clarifications to ensure that Compliance functions as the finders of fact and Appeals does not take investigative actions. These policies ensure taxpayers have a true appeal right so that Appeals reviews a final determination made by Compliance. The key collection policy clarifications include:

Appeals will not take investigative actions with respect to financial information provided by taxpayers. Financial information that warrants investigation will be sent to Collection.

  • Appeals will only consider assets that were documented by Collection or introduced by the taxpayer.
  • Appeals will not make recommendations to file Notices of Federal Tax Liens.
  • All Offers in Compromise submitted to Collection Due Process or Equivalent Hearings will be reviewed by Collection for a preliminary recommendation or acceptance.
  • In non-Collection Due Process or Offers in Compromise cases, Appeals will only determine the acceptability of the Offer in Compromise and will not offer other collection alternatives.

Key Collection Examination Policy Clarifications

The IRS also made some key examination policy clarifications that are effective October 3, 2016 and apply to docketed examination cases where a taxpayer submits new information or evidence or raises a new issue. The key examination policy clarifications include:

  • Appeals will attempt to settle a case based on the factual hazards when not fully developed by Examination (i.e. cases will not be sent back to Examination for further development).
  • Appeals will not raise new issues or reopen issues on which the taxpayer and Examination have reached an agreement.
  • Appeals will return non-docketed cases to Examination when a taxpayer submits new information or evidence or raises a new issue that merits investigation or additional analysis.
  • Appeals will retain jurisdiction of docketed cases when a taxpayer submits new information or evidence or raises a new issue that merits investigation or additional analysis, but will request assistance from Examination in performing those functions.
  • For most work streams, Appeals will engage Examination for review and comment when a taxpayer raises a relevant new theory or alternative legal argument.

What Taxpayers Need to Know

Taxpayers should fully cooperate with the IRS’s compliance function during the development of their cases so that their file is complete when it goes to Appeals. When a taxpayer appeals a compliance function’s decision, the taxpayer should specifically identify in their protest the items in dispute. If a taxpayer introduces new information in Appeals, it may result in Appeals returning the case to the compliance function. The policy changes discussed above ensure that taxpayers have an opportunity for an impartial appeal by ensuring Appeals reviews a final determination made by the compliance function. The aim of the policy clarifications is to improve the appeals process by strengthening a taxpayer’s right to an independent appeal.






On September 8, 2016, the IRS issued its final report on taxpayer compliance through fiscal year 2015 (the federal government’s fiscal year begins on October 1 and ends on September 30). The report is a compilation of statistical information collected by the IRS and provides taxpayers with information about how the IRS focuses its compliance resources and the impact of those resources on revenue and compliance over time.

For fiscal year 2015, the IRS continued to experience losses in the number of employees available to provide services to taxpayers and those needed to enforce the tax laws. In addition, after an increase in the in the IRS’s budget in 2014, the IRS’s budget for 2015 decreased $345 million (3 percent), from $11.3 billion to $10.9 billion. Despite fewer resources, however, total tax revenues received and collected climbed to $3.3 trillion, an increase of 8 percent from 2014. On the other hand, enforcement revenue collected decreased from $57.1 billion in 2014 to $54.2 billion in 2015, a decline of 5 percent. Unpaid assessments increased to $412 billion.

Total Tax Revenue by Type of Tax


Source: TIGTA analysis of the IRS Data Book.

Amount of Enforcement Revenue Collected
Compared to Unpaid Assessments

 Enforcement Revenue

Source: Offices of Research, Analysis, and Statistics and the Chief Financial Officer.

For 2015, while some areas of compliance declined, collections on delinquent accounts increased in every collection program except Field Collection (which consists of revenue officers who handle face-to-face contacts with taxpayers to collect delinquent accounts or secure unfiled returns). However, the number of liens, levies, and seizures by the IRS all declined in 2015. In addition, although the number of offers in compromise and installment agreements decreased in 2015, the amount of delinquent taxes collected through these payment options increased.

Notably, examinations continued to decline in 2015, with 28 percent fewer tax returns examined than in 2011. The report attributes the decline in the number of examinations to the 24 percent decrease in revenue agents and tax compliance officers during the same period.

Percentage Change from FY 2011 of All
Tax Returns Filed and Examined

Percent Change

Source: TIGTA analysis of the IRS Data Book.

Number of Revenue Officers in the Field Assigned
Delinquent Cases at the End of Each Fiscal Year

Revenue Officers

Source: Collection Activity Report 5000-23.