The Internal Revenue Service (IRS) is no longer requiring examiners to participate in the non-settlement stages of the IRS Large Business & International (LB&I) Appeals conferences. In May 2017, the IRS Independent Office of Appeals (Appeals) initiated a pilot program titled the Appeals Team Case Leader (ATCL) Conferencing Initiative. The program required examiners (Compliance) to participate in the opening conference of all large and complex LB&I cases sent to Appeals. Due to the complexity of these cases, Appeals generally assigns a team of Appeals technical employees led by an Appeals Team Case Leader. The IRS noted that although these LB&I cases make up less than 1% of Appeals’ total caseload, they involve “the majority of disputed tax dollars pending before Appeals.” The IRS stated that the purpose of the pilot program was for Appeals to “assess whether requiring Compliance and the taxpayer to participate in a joint discussion at the start of the case would help narrow the scope of the controversy and improve understanding of factual and legal differences in complex cases.”
The pilot program itself ended in May 2020. Since the expiration, the IRS has been reviewing data from internal surveys with Appeals employees and participating examiners, customer satisfaction surveys of taxpayers and representatives, written comments from external stakeholders, and informal comments and suggestions from tax practitioners provided during outreach events. The IRS recently released a summary of its review and findings. The IRS has decided that Compliance participation in LB&I Appeals case pre-conferences will no longer be mandatory. For decades, Appeals has had discretionary authority to invite examiners to participate in Appeals conferences. Appeals will revert to conducting these large cases under this discretionary authority, the same as all other Appeals cases.
In the summary of findings, the IRS noted that several commenters asked the IRS to institute a requirement for Appeals to obtain taxpayer consent before inviting Compliance to attend the non-settlement portion of Appeals conferences. Appeals has never been required to obtain taxpayer consent for compliance participation, and the IRS declined the request to institute required taxpayer consent. The IRS stated in the summary that requiring taxpayer consent “would effectively substitute the judgment of the taxpayer (or the taxpayer’s representative) for the judgment of the ATCL.” Please note that even if compliance is invited to participate in an Appeals conference, examiner participation is, and has always been, limited to the opening or pre-conference. The Appeals conference itself, and any settlement negotiations, is conducted only between Appeals officers and the taxpayers, as well as any taxpayer representatives.