SECTION 12. GENERAL

PROVISIONS

1. Communication with IRS and Coun- sel Permitted. Except as described in Section 10.03 with respect to mediators, Appeals has the discretion to communicate with the IRS Office of Chief Counsel, the originating IRS function, or both, in preparation for or during the mediation session. See Rev. Proc. 2012–18, 2012–10 I.R.B. 455. Appeals also has the discretion to have Counsel, the originating IRS function, or both, participate in the mediation proceeding to present the position and views of the IRS, and to rebut representations and arguments made by the taxpayer. Counsel’s participation in this regard is separate from the review function outlined in Section 11.03 of this revenue procedure.

.02 Employees . IRS employees who participate in or observe the mediation process in any way, and any person under contract to the IRS pursuant to section 6103(n) that the IRS invites to participate or observe, will be subject to the confidentiality and disclosure provisions of the Internal Revenue Code, including sections 6103, 7213, and 7431. .03 Section 7214(a)(8) disclosure . Under section 7214(a)(8), IRS employees must report information concerning violations of any revenue law to the Secretary. The agreement to mediate will state this requirement and the parties will acknowledge this duty.

.04 Disqualification of the non-IRS co- mediator . The non-IRS co-mediator will be disqualified from representing the taxpayer in any pending or future action that involves the transactions or issues that are the particular subject matter of the mediation. This disqualification extends to representing any other parties involved in the transactions or issues that are the particular subject matter of the mediation.

(a) Disqualification of co-mediator’s firm. Moreover, except as provided in section 12.04(b), the co-mediator’s firm will be disqualified from representing the taxpayer or any other parties involved in the transactions or issues that are the particular subject matter of the mediation in any action that involves the transactions or issues that are the particular subject matter of the mediation.

(b) Exception to disqualification of comediator’s firm. The co-mediator’s firm will not be disqualified from representing the taxpayer or any other parties in any future action that involves the same transactions or issues that are the particular subject matter of the mediation, provided that (i) the co-mediator disclosed the potential of such representation to the parties to the mediation conducted by the co-mediator prior to the parties’ acceptance of the co-mediator, (ii) such action relates to a taxable year that is different from the taxable year that is the subject matter of the mediation, (iii) the firm’s internal controls preclude the co-mediator from any form of participation in the matter, and (iv) the firm does not apportion to the comediator any part of the fee therefrom. In the event the co-mediator has been selected prior to the co-mediator learning of the identity of one or more of the parties involved in the mediation, requirement (i) will be deemed satisfied if the co-mediator promptly notifies the parties of the potential representation.

Although the co-mediator is prohibited from receiving a direct allocation of the fee from the taxpayer (or other party) in the matter for which the internal controls are in effect, the co-mediator will not be prohibited from receiving a salary, partnership share, or corporate distribution established by prior independent agreement. The co-mediator and

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his or her firm are not disqualified from representing the taxpayer or any other parties involved in the mediation in any matters unrelated to the transactions or issues that are the particular subject matter of the mediation.

This section 12.04 only applies to representations on matters before the IRS.

The provisions of this section 12.04 are in addition to any other applicable disqualification provisions, including, for example, the rules of the United States Tax Court and applicable canons of ethics.

.05. Recording of mediation session. The parties to the mediation may not make a stenographic record, audio or video tape recording, or other transcript of the mediation session.

.06 Use as precedent . A settlement reached by the parties through mediation will not be binding on the parties (or be otherwise controlling) for taxable years not covered by the agreement. Except as provided in the agreement, no party may use such settlement as precedent.