Appeals Arbitration Is Business-As-Usual at the IRS

The Internal Revenue Service (IRS) has announced that the Appeals Arbitration process, in which the IRS and the taxpayer agree to have a third party make a binding decision regarding factual issues, has become business as usual at the IRS. Revenue Procedure 2006-44 formalizes the arbitration process which may be used while a case is in Appeals, after settlement discussion have failed and the only remaining issues are those related to the specific factual issues for which arbitration is being requested.

Arbitration is not available for all issues. Some of the issues ineligible for arbitration include:

  • Legal issues
  • Issues already in court or litigation
  • Issues designated for litigation
  • Collection cases, with certain exceptions
  • Frivolous issues

Initially introduced as a pilot program, the Arbitration process allows taxpayers and the IRS to jointly request binding arbitration regarding certain unresolved factual issues. During the course of an Appeal, when a limited number of factual issues remain unresolved, either the taxpayer or the IRS can request arbitration and jointly select an Appeals or non-IRS Arbitrator from any local or national organization providing a roster of neutrals. If an non-IRS Arbitrator is selected, both parties will equally share the costs, including compensation, expenses and related fees or costs, of the Arbitrator. In addition, the Arbitrator, and the Arbitrator’s firm, will be barred from representing the taxpayer before the IRS in any pending or future action involving the transactions or issues that were subject to the arbitration.

Rev. Proc 2006-44 becomes effective October 30, 2006.

You may like these other stories...

Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
Some of your clients may get away to business conventions from time to time. It gives them a chance to rub shoulders with colleagues, catch up on the latest developments, and fine-tune their skills. And, when the meetings or...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.