DOR Offers Taxpayers a Faster Way to Settle Tax Disputes
Successful pilot program becomes permanent option for more taxpayers
(Boston, MA)-Massachusetts Revenue Commissioner Amy Pitter today announced that the Department of Revenue (DOR) will give taxpayers an option for settling tax disputes faster than traditional appeal methods or litigation following the success of a year-long early mediation pilot program.
Three of four corporate taxpayers that participated in the pilot settled their $1 million dollar or more tax assessments during the very first mediation session. These cases with tax assessments ranging from $2.6 to $9.7 million closed in three-and-a-half to five months compared with the year or more it would have taken through the department’s regular appeals process.
“This is a win-win for both taxpayers who are disputing large tax assessments and DOR,” said Commissioner Pitter. “Long, drawn out appeals cost us both time and money, but if we can mutually settle a number of audit cases through early mediation in under half the time it normally takes, our entire appeals process becomes more efficient.”
Commissioner Pitter noted that one reason the program worked so well was because hearing officers who acted as neutral facilitators were trained in mediation techniques while auditors and attorneys representing the department took classes in conflict resolution.
“We know from experience that if both sides can come to mediation early in the appeals process after the issues and facts have been developed, but before their positions harden and become polarized, then there’s a greater chance for settlement,” said Commissioner Pitter.
The success of the pilot encouraged DOR to make early mediation an integral part of the department’s resolution process and lower the eligibility requirement so more taxpayers can choose the option. The tax assessment threshold is now $250,000 instead of the $1 million dollar base for the pilot program. Other eligibility requirements for early mediation include:
- Taxpayers must state their case and facts in writing,
- The issues of the case must be fully developed,
- Both the taxpayer and DOR must come to mediation willing to settle,
- Decision makers for both the taxpayer and DOR must participate in the mediation sessions.
Three audit cases with assessments between $250,000 and just over $1 million dollars are scheduled for early mediation in October. Out of 717 pre-assessment audit cases in appeals in FY2013, 77 are likely to have tax bills over the new threshold and could be eligible for the program.