SECTION 4. SCOPE OF

MEDIATION

.01 In general. Mediation may be used to resolve issues in cases that qualify under this revenue procedure while they are under consideration by Appeals. This procedure may be used only after Appeals settlement discussions are unsuccessful and, generally, when all other issues are resolved but for the issue(s) for which mediation is being requested.

.02 Authority . The mediation procedure does not create any special authority for settlement by Appeals. During the mediation process, Appeals is still subject to the procedures that would be applicable if the issue were being considered via the standard Appeals process, including procedures in the Internal Revenue Manual and existing published guidance. The mediator does not have settlement authority and cannot render a decision regarding any issue in dispute.

.03 Applicability . Mediation is available for:

(1) Legal issues; (2) Factual issues; (3) A Compliance Coordinated Issue (CCI) or an Appeals Coordinated Issue (ACI). (CCI and ACI issues are listed online at www.irs.gov/appeals). However, a CCI or ACI issue will not be eligible for mediation when the taxpayer has declined the opportunity to discuss the CCI or ACI issue with the Appeals CCI or ACI coordinator during the course of regular Appeals settlement discussions;

(4) An early referral issue when an agreement is not reached, provided the early referral issue meets the requirements for mediation. For more information on early referrals, see section 2.16 of Rev. Proc. 99–28, 1999–2 C.B. 109, or the corresponding provision of any successor guidance;

(5) Issues for which a request for competent authority assistance has not yet

been filed. Taxpayers are cautioned that if they enter into a settlement with Appeals (including an Appeals settlement through the mediation process) and then request competent authority assistance, the competent authority will endeavor only to obtain a correlative adjustment with the treaty country and cannot take any actions that would otherwise change the settlement. See section 7.05 of Rev. Proc. 2006–54, 2006–2 C.B. 1035, or the corresponding provision of any successor guidance. If a taxpayer enters into the Appeals mediation program, the taxpayer may not request competent authority assistance until the mediation process is complete, unless the taxpayer demonstrates that a request for competent authority assistance is necessary to keep open a period of limitations in the treaty country. If so, competent authority assistance may be requested while mediation is pending. Where the requirements of this section have been satisfied and competent authority has been requested, and the taxpayer must notify the U.S. competent authority that the case is in mediation in Appeals, the taxpayer must notify the mediator that competent authority assistance has been requested and that the provisions of this section have been satisfied. The U.S. competent authority will suspend action on the case until mediation is completed;

(6) Unsuccessful attempts to enter into a closing agreement under section 7121;

(7) OIC issues, as provided in Section 5 of this revenue procedure; and (8) TFRP issues, as provided in Section 6 of this revenue procedure. .04 Inapplicability . Mediation is not available for:

(1) Cases in which mediation is not appropriate under either 5 U.S.C. § 572 or 5 U.S.C. § 575, which provide the general authority and guidelines for use of alternative dispute resolution in the administrative process;

(2) Issues designated for litigation; (3) Issues docketed in any court (for the Chief Counsel mediation program involving issues in docketed cases, see Chief Counsel Directives Manual (CCDM) 35.5.5.4);

(4) Collection cases, except for certain OIC and TFRP cases as detailed in this revenue procedure;

(5) Issues for which mediation would not be consistent with sound tax administration, such as, but not limited to, issues governed by closing agreements, res judicata, or controlling Supreme Court precedent;

(6) Frivolous issues, such as, but not limited to, those identified in Rev. Proc. 2012–2, 2012–1 I.R.B. 92, or any subsequent revenue procedure;

(7) “Whipsaw” issues, or issues for which resolution with respect to one party might result in inconsistent treatment in the absence of participation of another party, such as, but not limited to, issues on a joint return where both spouses do not agree to participate in the same mediation proceeding or where one spouse is claiming innocent spouse treatment under section 6015;

(8) Cases in which the taxpayer did not act in good faith during settlement negotiations, such as, but not limited to, cases in which the taxpayer failed to timely respond to document requests or offers to settle, or failed to address arguments and precedents raised by Appeals;

(9) Cases that were previously mediated through a different alternative dispute resolution program within Appeals, such as Fast Track Settlement or Fast Track Mediation; and

(10) Issues that have been otherwise identified in subsequent guidance issued by the IRS as excluded from the mediation program.