SECTION 2. BACKGROUND

The mission of Appeals is to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer. Mediation is an extension of the Appeals process and will enhance voluntary compliance. Mediation is a nonbinding process that uses the services of a mediator, as a neutral third party, to help Appeals and the taxpayer reach their own negotiated settlement. (References herein to “mediator” include any non-Internal Revenue Service co-mediator, as appropriate ( see sections 5.06 and 5.08 of this revenue procedure). To accomplish this goal, the mediator will act as a facilitator, assist in defining the issues, and promote settlement negotiations between Appeals and the taxpayer. The mediator will not have settlement authority in the mediation process and will not render a decision regarding any issue in dispute. The mediator should inform and discuss with Appeals and the taxpayer the rules and procedures concerning the mediation process.

Section 7123(b)(1) of the Internal Revenue Code, as enacted by § 3465 of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105–206, 112 Stat. 685, provides for expansion of the Appeals mediation program. The Service previously allowed taxpayers to request mediation for factual issues involving an adjustment of $1 million or more that were already in the Appeals administrative process. See Announcements 98–99 and 2001–9.