Tax Law Center Blog

The Internal Revenue Service (IRS) Independent Office of Appeals has initiated a significant two-year pilot program for Post Appeals Mediation (PAM), signaling a commitment to Alternative Dispute Resolution (ADR) and offering tax professionals new strategic opportunity in unsettled cases. Announced on October 1, 2025, in IR-2025-100 these changes fundamentally reshape the post-Appeals landscape.

The enhancements to the voluntary PAM program address long-standing concerns within the tax professional community and create an opportunity for taxpayers to seek administrative resolution up to three times before resorting to the cost and burden of litigation.

A “Fresh Look” at Final Impasses

Historically, PAM allowed taxpayers to request a mediation session after an unsuccessful traditional Appeals conference. The process involved the taxpayer and the Appeals Officer who presided over the unsuccessful settlement attempt, with a new, neutral Appeals Officer serving as the mediator. While beneficial, practitioners often cited concerns that the presence of the original Appeals Officer hindered the introduction of a truly fresh perspective.

The new pilot program directly addresses this issue by introducing a critical structural change:

• Mandatory Reassignment: If a request for PAM is accepted, the case will be reassigned to a completely new Appeals team with no prior connection to the underlying matter. This new team will represent the IRS during the mediation session.

This single change is expected to be a game-changer. The Appeals Officer representing the IRS will no longer carry the institutional memory or perceived commitment to a prior position, allowing the case to be evaluated with fresh eyes and a renewed focus on litigation hazard analysis. Taxpayers still have the option to include a private, third-party co-mediator at their own expense to further facilitate the discussions.

The Elimination of the Fast Track Hurdle

Compounding the benefits of the “fresh look” approach is the removal of a major eligibility restriction earlier this year. As documented in IR-2025-14 (Jan. 15, 2025) and Announcement 2025-6, the IRS has eliminated the rule that generally made a case ineligible for PAM if the taxpayer had previously participated in Fast Track Settlement (FTS) on the same issue.

This procedural liberalization is deeply significant for tax controversy strategy:

1. Fast Track Settlement (FTS): Early mediation during the examination phase.
2. Traditional Appeals: The formal protest and settlement conference.
3. Post Appeals Mediation (PAM): A final, expedited mediation after the traditional Appeals process fails.

For the first time, taxpayers have a formalized path to pursue three separate administrative resolution attempts. This layered approach allows practitioners to be more aggressive and tactical in using ADR mechanisms, knowing that an unsuccessful attempt at an earlier stage (like FTS) does not preclude a final attempt at resolution before the judicial forum.

Strategic Implications for Tax Practitioners

These changes necessitate a recalibration of dispute resolution strategy:

• Maximized Administrative Leverage: Practitioners must now view the entire controversy process as a continuum of three distinct, non-mutually exclusive administrative opportunities. This offers significant leverage by pushing for resolution prior to the time and cost associated with Tax Court litigation.
• The Mediation Submission: A successful PAM under the pilot hinges on the clarity and persuasiveness of the pre-mediation submissions. Since the Appeals team representing the government will be new to the file, the practitioner must ensure their arguments and factual record are impeccable, presenting a compelling and self-contained case for resolution.
• Final Pre-Litigation Analysis: PAM is now the definitive “last best chance” to settle. Practitioners should use this two-year pilot window to push unsettled cases into this new process, strategically leveraging the new team’s impartial review to achieve a favorable outcome.

The IRS Appeals PAM pilot program reflects a growing institutional understanding that efficient and fair tax administration benefits from robust, accessible, and credible ADR programs. This enhanced PAM program is an invaluable tool for tax professionals seeking to deliver certainty and cost savings for their clients.

Is your client’s unresolved tax matter poised for litigation? The new PAM pilot program offers a powerful, low-risk opportunity to resolve disputes without judicial intervention. Contact us for a strategic consultation to discuss how we can leverage these enhanced ADR pathways to secure the best possible resolution for your client.