The IRS Independent Office of Appeals has initiated a revolutionary pilot program, for a two-year term, to revolutionize Post Appeals Mediation (PAM). The program will present taxpayers with a more appealing and effective alternative to resolve their tax disputes. The pilot program was announced on October 1, 2025, and its objective is to increase the usage of ADR (alternative dispute resolution) in efforts to improve taxpayer experience with the IRS, resolve tax disputes, and lower IRS case backlogs, all while providing new procedural options for individual and business taxpayers at a critical stage of removing their cases from Appeals.
Discover the structure, goals, a basic overview of procedural revisions, connections to other ADR programs, and hopefully the impact this new PAM program will have on IRS dispute resolutions over the next two years and beyond.
Understanding Post Appeals Mediation (PAM)
PAM is an alternative dispute resolution (ADR) mechanism available after an unsuccessful attempt to resolve a dispute through the IRS Appeals process.
PAM involves, instead of moving into expensive and lengthy litigation, a structured one-day mediation session with a neutral IRS mediator and sometimes a taxpayer's independent co-mediator.
PAM aims to promote negotiations and increase clarity about the sticking points, and establish areas of commonality that allow both parties to avoid the escalation associated with contesting in the tax court.
What’s Different in the 2025-2027 PAM Pilot Program?
Key Improvement under PAM Pilot:
- When a PAM request is made and accepted, the matter will be referred to a separate Appeals team that had nothing to do with the original case, and this team will represent the IRS in the mediation session.
- The mediator will still be a separate Appeals representative, so both the team and the mediator will provide a "fresh look" at the case.
- All other PAM components are unchanged: 1-day guided mediation, taxpayer option to co-mediator, and expedited framework for resolving the matter before litigation.
Objectives:
- Increase taxpayer confidence that their matter will be assessed on an impartial basis.
- Encourage further use of ADR, which is, on average, less expensive, quicker, and more satisfactory than litigation.
- Encourage voluntary compliance and reduce the burden on IRS resources.
The IRS ADR Ecosystem: Context for the PAM Pilot
The IRS has created a range of ADR (Alternative Dispute Resolution) options, which are now being modernized through additional pilots:
- Fast Track Settlement (FTS): Mediated disputes under examination or collection and pilot now offered on an issue-by-issue basis.
- Fast Track Mediation Collection: Issue-specific for collection matters.
- Rapid Appeals Process (RAP): Faster resolution within Appeals for certain cases.
- Early Referral: Refers open issue(s) in an ongoing audit to Appeals before the audit is completed.
Importantly:
This pilot enables the taxpayer to request FTS without losing their PAM eligibility, and denials for PAM and FTS both require first-line executive approval and a written explanation.
Key PAM Pilot Procedural Details
Below are the details you must be aware of:
Case Assignment and Mediation Structure
- Case Reassignment: Every PAM case is handled by new Appeals teams for mediation representation - this is supposed to help in maintaining neutrality and impartiality.
- Agreement to Mediate: The parties will sign an agreement that accurately lists the issues being mediated and the process for the parties to participate. Ex parte communications will not be allowed, and disclosures made during the proceeding will be managed to ensure privacy and legal compliance.
- Scheduling: Mediation sessions will take place as quickly as possible, and ideally within 60 days after the mediation agreement has been executed.
Flow of the Mediation Session
- Identifying Issues: The parties, with the help of the mediator, will identify the specific tax disputes.
- Negotiation: The mediator will facilitate the parties in discussing openly to settle. This process will provide both sides the opportunity to propose options, explain their reasons, respond to, and counteroffer when necessary.
- Resolution Document: If an agreement is reached, the parties will write the terms down for each party to sign. If no agreement is reached, the parties will keep the option of litigation.
Oversight and Accountability
- All denials of participation must be justified to the taxpayer in writing.
- At the conclusion of the pilot, the results of the program will be reviewed to assess the viability of making the program a future permanent program, a modified permanent program, or discontinuing the program altogether.
Measuring Success: Benefits & Goals
Here are the benefits and goals for taxpayers and the IRS:
For Taxpayers
- Enhanced fairness by way of a neutral case review.
- Streamlined, less adversarial resolution, usually happens in one day.
- Less costly, faster, and less stressful than tax litigation.
- Direct participation in considering the resolution, plus an optional support team.
For the IRS:
- Lighter litigation workload and optimized use of resources.
- Better voluntary compliance as a result of perceived and real procedural justice.
- Stronger relationships and trust in the taxpaying community.
For the Bigger Tax System:
- Model for continued improvement of the ADR program.
- Actual data from the field to inform the IRS's reforms and best practices for regulating.
ADR Participation Trends & Demand
There have been consistent increases in the use of ADR in the past few years: PAM case filings have doubled in some cycles.
- The success rates in Fast Track Settlement cases are reported to be above 89%, and above 91% for business cases, along with important efficiency benefits (often less than 4 months for LB&I, and 3 for SB/SE).
- Taxpayer advocates and experts anticipate revisions to PAM will bring even higher usage and satisfaction, assuming the "fresh look" model remains in place and is enhanced.
Expanded Access: Who Should Use PAM?
- For Individuals and Small-to-Medium Businesses: Individuals and small-to-medium businesses who finish a common appeal without reaching a resolution or settlement, but prefer to resolve the dispute outside of tax court.
- For Large Corporations: Particularly where factual issues, rather than legal issues, are predominant.
- Tax professionals and Tax counsel: Individuals, such as tax professionals or tax counsel, who negotiate resolution for clients prefer an effective and neutral environment.
Best Practices for Navigating PAM Successfully
Be sure you have organized, well-documented case files and are generally aware of IRS positions and rules.
- You'll benefit by collaborating with seasoned tax advisers who are experienced with IRS ADR processes.
- Mediation is an opportunity for creative problem solving, not positional bargaining.
- Be mindful of your procedural rights, participating in mediation does not affect future litigation.
- Be sure you are diligent with follow-ups: requests for agreements to be in writing, and ensure all disclosure is complete and accurate.
Looking Ahead: Future of ADR at the IRS
Both IRS leadership and advocates for taxpayers expect:
- Increased taxpayer demand for non-litigation options to resolve disputes.
- Additional procedural reforms resulting from pilot program reviews.
- Increased ADR availability (particularly for low-income tax taxpayers and correspondence examinations, as suggested by the National Taxpayer Advocate).
- Renewed interest in creating new options for binding arbitration.
- Increased training and cultural shift inside IRS enforcement and Appeals functions to obtain full buy-in and use mediation effectively.
Helpful Links
- IRS Seeks Volunteers for No-Cost Tax Services 2025
- IRS Cracks Down on Tax Scams Linked to Social Media: Penalties Soar
- IRS Tax Forum 2025: Registration Timelines & Insights
The IRS's 2025 Post Appeals Mediation pilot (PAM) offers an exciting pathway to reach a fair and expedient resolution of tax disputes after Appeal. By having the appeal be assigned to "fresh eyes," the program has the potential to provide taxpayers with even more opportunity to resolve the case, thus allowing for a faster resolution of tax disputes, saving the taxpayers time, money, and anxiety, and potentially freeing up IRS resources.
As the 2025 Post Appeals process takes place, taxpayers and practitioners participating in the process, along with IRS participants, will provide input and feedback, as well as experience, to further shape the ADR in the American tax administration scene. These outcomes will set the stage for meaningful reform and improvements.
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