Executive Summary
- What’s new: The IRS announced modifications to its post-appeals mediation (PAM) program under which reviews will now be assigned to appeals teams with no prior involvement in the case.
- Why it matters: The changes aim to boost taxpayer confidence in PAM’s impartiality and make mediation a more attractive alternative to litigation.
- What to do next: Taxpayers may want to review the updated PAM procedures and eligibility requirements and consider using PAM for unresolved appeals issues.
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On October 1 2025, the Internal Revenue Service (IRS) announced a new pilot program designed to make the IRS Post Appeals Mediation (PAM) process more attractive to taxpayers. The new procedures are contained in an interim guidance memorandum dated September 11, 2025.
PAM offers taxpayers a non-binding alternative dispute resolution mechanism while their cases are still in the jurisdiction of the IRS Independent Office of Appeals (Appeals), with the goal of expediting a possible settlement and avoiding litigation. Since January of 2025, the IRS has been testing changes to its Alternative Dispute Resolution (ADR) programs, including PAM.1 With the latest announced changes, cases handled through the PAM pilot will be assigned to a new team unconnected with the underlying case. This assignment of a new Appeals team addresses taxpayers’ concerns regarding the effectiveness of PAM and increases confidence that the process will afford a meaningful additional opportunity for resolution at Appeals.
Post-Appeals Mediation
Section 7123(b)(1) allows taxpayers to request non-binding mediation for issues unresolved in the regular Appeals process.2 PAM eligibility criteria and procedures are set forth in Rev. Proc. 2014-63. Mediation is initiated on application of the taxpayer, which, under existing procedures, must be approved by the Appeals Team Manager (ATM) already assigned to the case.3 Following approval, the taxpayer and the ATM select an Appeals mediator, generally from the same Appeals office or geographic area as the case assignment, but not from the same group or team handling the case. Taxpayers also have the option of using a co-mediator from outside the IRS at their own expense.4 The mediator and co-mediator (if applicable) then conduct a mediation session with the taxpayer and the Appeals team that handled the regular Appeals case.
Pilot Changes to Post-Appeals Mediation
The Interim Guidance makes three notable changes to PAM procedures. First, rather than review the PAM application, the “referring” ATM receiving an application from the taxpayer forwards the application for initial review by the Alternative Dispute Resolution Program Management Office (ADR PMO).5 The IRS launched this office in April 2024, seeking to expand access to its ADR programs.6 The ADR PMO’s role in the PAM pilot is to confirm the case’s eligibility for PAM consistent with preexisting guidance.7
Second, the PAM application is rerouted to a new ATM ("receiving" ATM) lacking any connection with the prior Appeals case for substantive review. In certain circumstances, the receiving ATM may deny the PAM request as inappropriate for mediation — for example, if the issues pose zero litigation risk to the government.8 In such a case, denial must be discussed with ADR PMO and approved by a first-line executive. Otherwise, the receiving ATM will accept the case and assign it to a new Appeals Officer or Appeals Team Case Leader (collectively referred to as Appeals Technical Employees).
Third, in addition to not serving on the receiving ATM’s team, the Appeals mediator selected for the case must not serve on the team of the referring ATM.9 The receiving team is instructed to limit communications with the referring team, except where necessary to handle administrative matters.10
One notable feature of the new guidance pertains to Appeals Technical Specialists. While the guidance indicates every effort will be made to assign a new Technical Specialist, the involvement of Technical Specialists is not within the scope of the pilot procedures because in certain cases required specialized knowledge cannot be quickly developed. In other words, no other specialist may be readily available. As the role of specialists and their perceived impact on Appeals’ independence has been a hot button topic for Appeals in recent years, some taxpayers may not respond favorably to the involvement of the same Appeals specialist in both the regular Appeals and PAM proceedings.
The Interim Guidance explicitly leaves in place other existing PAM procedures and states the changes will be evaluated after a two-year test period.
Other changes to PAM announced in January include permitting PAM for cases that have already been through Fast Track and requiring executive approval of proposed denials of PAM applications.11 Together, these announced changes should make PAM a more accessible and attractive alternative to proceeding straight to litigation.
In announcing the new pilot, Appeals stated that it is “continually looking to increase usage of its five ADR Programs: Fast Track Settlement, Fast Track Mediation Collection, PAM, the Rapid Appeals Process, and Early Referral in ways that better serve taxpayers and the IRS and contribute to the quick and efficient resolution of tax controversies.”12
The importance of these efforts is heightened by significant recent IRS resource losses in both Appeals and Compliance, which have led to increased in interest in these programs by taxpayers and the IRS alike. See our September 25, 2025, article “IRS Procedural Reforms Aim To Allow Early Resolution of Controversies With Businesses.” Taxpayers will be well-served by familiarizing themselves with the potential benefits of the various ADR alternatives as they attempt to navigate the resolution of tax controversies in the current environment.
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1 I.R.S. Announcement 2025-6, 2025-5 I.R.B. 526.
2 I.R.C. § 7123(b)(1).
3 Rev. Proc. 2014-63, 2014-53 I.R.B. 1014, § 7.
4 Id. at § 9.01.
5 I.R.S. Appeals Interim Guidance Memorandum AP-08-0925-0017 (Sept. 11, 2025), ¶ 1(a).
6 I.R.S. News Release IR-2024-119 (Apr. 24, 2024).
7 I.R.S. Appeals Interim Guidance Memorandum AP-08-0925-0017 (Sept. 11, 2025), ¶ 1(b).
8 Id. at ¶ 3.
9 Id. at ¶ 5.
10 Id.
11 I.R.S. Announcement 2025-6, 2025-5 I.R.B. 526.
12 I.R.S. Announcement 2025-100.
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