Massachusetts Department Of Revenue And Appellate Tax Board Look To Expand Tax Dispute Mediation Programs

The Massachusetts Department of Revenue has indicated it is looking to expand taxpayer eligibility for its early mediation program for expedited settlement of tax disputes by including taxpayers with smaller proposed tax assessments—potentially as low as $250,000, compared with the current published guidance that limits the program to proposed assessments of $1 million or more. Speaking at the Boston Bar Association, Commissioner Amy Pitter stated that the Department has completed the initial pilot run of its mediation program, with three of the four mediated tax disputes ending in a settlement agreement. Commissioner Pitter also confirmed that the Department would be moving forward with the program on a permanent basis, making some adjustments to the program and expanding it to a wider group of potential taxpayers.

Last December, responding to taxpayer concerns that the tax appeal process in Massachusetts can last several years, the Department finalized Administrative Procedure 635, outlining a pilot mediation program in an attempt to speed up the resolution of disputed tax matters. Under this program, taxpayers with proposed assessments of $1 million or more that met certain criteria were eligible to enter into a four-month mediation program—if the Department agreed. The parties and a mediator would then attempt to facilitate a settlement of the issues in dispute. If the mediation did not result in a settlement, the taxpayer still had the same appeal rights as with any other proposed tax assessment.

With the seeming success of the pilot program—three of four cases ending in a settlement within four months—the Department is considering expanding the program to include audits with proposed assessments at a still-to-be-determined lower threshold, perhaps $250,000 or $500,000. The Department is also looking to revise its internal procedures to meet the intensive time demands that the mediation program imposes on its audit staff.

The Commissioner indicated that taxpayers interested in mediationincluding those with proposed...

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