The IRS Office of Appeals used to be chock full of some absolutely wonderful people, the best and brightest. When my father and I started IRSMedic many moons ago, the IRS Appeals Officers helped our clients tremendously. We worked incredibly well together, and unless we wanted to challenge the law the Appeals Officer was bound by, we couldn’t think of one instance where petitioning the tax court was necessary.
Over the years, many of our favorite IRS Appeals Officers have retired (no offense current Officers, but you know you miss them too). While many competent, reasonable, diligent, and even nice Appeals Officers remain, I haven’t come across any new hires in the past five years or so. This leads me to a simple and horrifying conclusion – the IRS hasn’t been hiring enough Appeals Officers to keep up with the increased demand.
Consequently, IRS Appeals has become understaffed, which leaves current Appeals Officers overworked and burdened with a much more grueling case load. Furthermore, no experienced Appeals Officers have time to mentor the newer Officers; thus begins a cycle of the un-mentored laying the groundwork for the next generation to emulate. In turn, the next generation will also be left without proper mentoring and will head out lacking a proper understanding of the destruction they so flippantly wield. Once a vicious cycle starts, it’s a whole lot of trouble to stop.
Recent experience has showed me that the problem for the IRS, taxpayers, and practitioners is that Appeals is a shadow of its former glory. IRS Appeals used to keep cases out of tax court by being so reasonable and creative that it was a pleasure to be a part of; I mean it, it was truly remarkable. Those of us who have been in tax resolution for a while know this to be true; we hold a good bit of nostalgia for what we once took for granted.
Now, because IRS Appeals can’t do the job the way it used to, taxpayers – who are represented by competent counsel during the IRS appeals process – force IRS Counsel into unwanted settlements during tax court petitions. Why? Because Appeals is unable to perform its core function due to staffing, training, and retention issues.
At least that’s my opinion, which is based on observation and experience.
The IRS' new Post-Appeals Mediation Program supports my audacious accusation
In December of 2014, the IRS came out with a Post-Appeals Mediation Program for when an Appeals Settlement conference fails.
Let me drive this point home: IRS Appeals was always loaded with the best and the brightest. Always. Again, if you had a disagreement with IRS Appeals, you better have some pretty dang good grounds to file a tax court petition; otherwise, you’re looking at a substantial waste of your time. Unless, of course, you were wanting to challenge one of the legal precedents the IRS Appeals Officer was bound by (like the time to file a claim for an Innocent Spouse). In that case, you may have had an Appeals Officer tell you, “good luck in tax court,” and really, truly, 100% mean it.
So now, at the tail of 2014, we see a new program emerge – Post-Appeals Mediation or PAM. Well, why did the IRS come up with PAM? According to their own web page about the miracles of PAM:
The benefits of PAM settlement over litigation include:
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Speed
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Cost
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Flexibility
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Control
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Reduced Risk
This, my friend, is what we in the business call seriously F’d up. IRS Appeals’ own mission statement says:
"Every year, the Office of Appeals helps over 100,000 taxpayers resolve their tax disputes without going to Tax Court. We are an independent organization within the IRS whose mission is to help taxpayers and the Government resolve tax disagreements. Appeals does not seek to take sides in a dispute; rather we offer an objective point of view on each individual case. We review each case after the applicable IRS compliance has made its decision and work to resolve disagreements in the case on a basis that is fair and impartial to both the Government and the taxpayer."
So, if IRS Appeals does not seek to take sides in a dispute but rather offer an objective point of view on each individual case, then should that not foreclose the necessity of Post-Appeals Mediation? What value could PAM add if Appeals was able to perform its core mission properly?
And this is the part that gets me. This is the part that really gets me all sorts of head-tilting, shouting-at-the-top-of-my-lungs, no man, no. In selling PAM, the IRS wants you to search deep within those dark doubting shadows of your mind and ask yourself these questions:
- If my case is not settled, am I prepared for what could be a lengthy and costly litigation?
- What is my risk should the litigation will be unsuccessful, and what would the consequences be?
Do you see that? Do you see what they did there? The IRS is agitating you away from filing a tax court petition due to an unsuccessful Appeal. This is the classic sales trick. i.e., Hey man, what girl will want to date you if you don’t wear Dingo boots?
The IRS wants you to try a Post-Appeals mediation that should be superfluous, but apparently is not! Therefore, I humbly submit the foregoing in support of my proposition that the IRS Post-Appeals Settlement Program, aka PAM, is a tacit admission by the IRS that IRS Appeals is failing in its mission statement and core functioning.
