IRS Launches Pilot Program to Make Post-Appeals Mediation “More Attractive to Taxpayers”

On October 1, 2025, the Internal Revenue Service (IRS) announced the launch of a two-year pilot program that is designed “to make Post Appeals Mediation (PAM) more attractive to taxpayers.” Post-Appeals Mediation is one of a handful of options available to individual and corporate taxpayers who disagree with the IRS’ conclusions following the audit process. Learn more from Texas IRS audit attorney Lawrence Brown:

The IRS’ Post-Appeals Mediation (PAM) Program

The IRS’ Post-Appeals Mediation (PAM) program is intended to resolve taxpayer disputes when a taxpayer is unable to obtain a satisfactory resolution during the initial appeals stage. As the IRS explains:

“Taxpayers can request PAM at the conclusion of an unsuccessful Appeals proceeding, and if the request is accepted, the parties meet in an accelerated mediation session where they make a final attempt to negotiate a mutually acceptable resolution. These sessions usually last one day. They are facilitated by an Appeals mediator with no connection to the underlying case, and taxpayers are invited to include a co-mediator at their own expense. The mediators promote settlement negotiations between the parties while helping them define the issues and identify common ground.”

Taxpayers must apply to participate in the PAM program, and if their application is accepted, the IRS states that “the goal is resolution within 60-90 days.” Before mediation can begin, the taxpayer must sign an agreement to mediation; and, in all cases, mediation is conducted according to the IRS’ stipulated procedures (there are separate procedures for collection and non-collection cases).

The IRS’ New PAM Pilot Program

In its October 1 announcement, the IRS states that under the “new PAM pilot,” cases will be reassigned to a different team within the agency’s Independent Office of Appeals during the mediation process. Otherwise, “all aspects of PAM will remain the same.” Thus, in addition to being facilitated by a mediator who has no connection to the underlying case, mediation will also involve negotiating with personnel at the Independent Office of Appeals who have no connection to it.

As the IRS explains, the reason for this is, “to facilitate an expedited fresh look at the case in which mediators help the parties explore all potential paths to resolution prior to potential litigation.”

While the IRS notes that PAM proceedings often lead to settlements, it anticipates that this “small structural change” could have a significant impact during the pilot period. If the Independent Office of Appeals personnel involved in a mediation proceeding have not already formed opinions about the taxpayer’s liability, this will—at least in theory—help facilitate resolution-oriented settlement negotiations.

However, if the personnel representing the IRS in negotiations are not familiar with the underlying case, this could also lead to additional delays as they get up to speed. If the factual issues in the dispute are particularly complex, negotiating with personnel unfamiliar with the case could pose additional challenges. Ultimately, whether and to what extent the new PAM pilot program serves as a more efficient means to better outcomes for taxpayers will likely be determined on a case-by-case basis.

Alternatives to Post-Appeals Mediation

For high-income and high-net-worth taxpayers facing significant tax liability following IRS audits (or, in some cases, during them), pursuing Post-Appeals Mediation is just one potential means of resolution. The IRS has established several other post-filing resolution options as well, including:

• Accelerated Issue Resolution (AIR)
• Early referral to the Independent Office of Appeals
• Fast-Track Settlement (FTS)
• Rapid Appeals Process (RAP)

When warranted, taxpayers can also dispute the IRS’ conclusions through the traditional appeals process. While the traditional appeals process often (though not always) begins with going to the Independent Office of Appeals, taxpayers can also dispute their liability in the U.S. Tax Court when necessary.

Which Option Should Taxpayers Choose?

With all of this in mind, which option should taxpayers choose when they need to challenge the IRS’ conclusions during the audit process?

Each of the options discussed above will be more or less suitable under different circumstances. As a result, taxpayers who need to challenge the IRS’ factual or legal findings will need to make an informed decision about how best to proceed based on the specific circumstances at hand. While pursuing Post-Appeals Mediation will be a viable option in some circumstances—and while pursuing PAM does not preclude taxpayers from formally challenging the IRS’ findings if necessary—taxpayers should not devote resources to the PAM process if it is unlikely to be successful.

Among other factors, the complexity of the issues at hand and the amount of additional liability in dispute are important considerations when deciding how best to move forward. Timing can be an important factor as well. For example, while PAM is an option following the initial stages of the appeals process, taxpayers can pursue an early referral or an FTS during the audit process if doing so is likely to facilitate an efficient and favorable resolution.

When deciding how best to move forward, taxpayers should also ensure that they have a clear understanding of the implications of any potential resolution. In particular, they will want to ensure they understand the additional risks they face going forward.

For example, as the IRS’ Model Agreement to Mediate under the PAM program states, “[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,” and, “[e]xcept as provided in the agreement, no PARTY may use such settlement as precedent.” This is consistent with other means of resolution as well. If a resolution with the IRS does not address all outstanding concerns, this is another factor taxpayers must consider when deciding how to proceed.  

Request a Call with Texas IRS Audit Attorney Lawrence Brown

If you have questions about resolving a significant tax controversy with the IRS in Texas, we invite you to contact us. To request a call with Texas IRS audit attorney Lawrence Brown, please call 888-870-0025 or contact us online today.