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Taxpayers looking for a faster way to resolve a tax dispute can now apply to DOR’s new early mediation program.

What began as a pilot program a year ago is now an integral option in the departments appeals process. The department has taken steps to expand the program and allow more taxpayers to use it by lowering the tax assessment threshhold from $1 million to $250,000. 

Four out of the first five taxpayers to use early mediation settled their cases during the first session of mediation which ran anywhere from two to eight hours.  These cases were resolved in approximately four months time instead of the year or more it typically takes to go through the traditional appeals process or litigation.

Business groups applaud the effort to expedite dispute resolution. “It’s great for taxpayers and good for businesses to provide them with certainty,” said Chris Kealey, Deputy Director of the Massachusetts Business Roundtable.

Christopher Geehern, an executive vice president at Associated Industries of Massachusetts (AIM) told the business publication Tax Analysts that “lowering the threshold for mediation tax disputes to $250,000 and increasing the number of mediation cases to 15 a year benefits both the taxpayer and the commonwealth by avoiding protracted litigation that needlessly diverts capital from job creation. ”

The goal of the program is to reach a resolution the day of the mediation. Each party has to come to the table with the authority to settle that day. It is intended to be a collaborative process and the parties are encouraged to be forthcoming with information and open to discussing alternatives for reaching a resolution. The number of attendees on each side is limited to two or three.

Mediation sessions are not the forum for power-point presentations, oral arguments, lectures or litigation posturing. Mediators have received outside training which is very different from their traditional roles as an appeals officer. The mediator is completley neutral, has no prior knowledge of the case and serves to facilitate a mutual resolution to the satisfaction of both parties. They hold joint sessions and provide opportunities for each party to caucus privately with or without the mediator present.

Ultimately the parties may negotiate a final settlement face-to-face or use the mediator as an intermediary. The mediator does not decide the issues or make decisions about the outcome. Although the mediator may recommend a settlement after the parties have made substantial and diligent efforts to settle the matter on their own, that recommendation is not binding.

If the case is not resolved during the early mediation, the taxpayer will still have the opportunity to pursue the traditional appeals process–a pre-assessment conference, a post-assessment abatement hearing and/or settlement consideration with the Office of Appeals.

In these cases, taxpayers will be assigned a new appeals officer and the officer who served as the mediator will not be involved. In fact, early mediation is confidential, so mediators do not discuss cases and destroy any notes they make take. All documents exchanged during mediation will not be subject to admission before the Appellate Tax Board or any court unless their is written consent from both the Commissioner and taxpayer. All conversations or negotiations between the parties in mediation are inadmissible in future appellate proceedings.

Three tax disputes are scheduled for early mediation over the next few months. Read More.

Written By:

Ann Dufresne is Communications Director at the Department of Revenue. She joined DOR in July 2012 after ten years in state goverment. She previously served as Communications Director for MassDOT Registry of Motor Vehicles and for Senate Presidents Therese Murray and Robert Travaglini.

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