IRS launches Post Appeals Mediation pilot program: what tax pros need to know

If your client’s appeal didn’t resolve the way you hoped, there’s a new opportunity to reach an agreement before heading to court. The IRS has introduced a two-year Post Appeals Mediation (PAM) pilot program, which gives taxpayers an additional opportunity to settle disputes after the traditional appeal process concludes.

Announced Oct. 1, 2025, the program is part of the IRS’s broader effort to strengthen its Alternative Dispute Resolution (ADR) options. The goal is to make mediation faster, fairer and more accessible while reducing the time and expense of going to court.

What PAM is and how it works

Post appeals mediation enables taxpayers and the IRS Office of Appeals to resolve disputes through a neutral third-party mediator, allowing the case to remain under IRS jurisdiction. A mediation session typically lasts one day and is facilitated by an appeals mediator who was not involved in the underlying case. The mediator’s role is to help both sides communicate effectively, clarify key issues and explore potential settlement terms.

Under the new pilot, the IRS has changed how these cases are handled. Instead of the same appeals team that dealt with the original case participating in the mediation, the matter will be reassigned to an entirely new appeals team that has no prior connection to the case. The goal is to provide a fresh perspective and eliminate any perception of bias or conflict of interest. This new structure is the biggest difference between the pilot and the existing PAM program.

The PAM process remains nonbinding, meaning neither the taxpayer nor the IRS is forced to accept an outcome. Both sides must agree for a settlement to take effect.

Why the IRS launched the pilot

The Independent Office of Appeals has used mediation for years as part of its ADR toolkit, but participation has been limited. By reassigning cases to a new team, the IRS hopes to make mediation more appealing to taxpayers and representatives who may have felt the original review team was too invested in its position. The IRS believes this change will increase participation and confidence in the process while reducing case backlogs.

The pilot also aligns with other recent ADR updates, including modifications to the Fast Track Settlement (FTS) process. (FTS happens during Examination, while PAM is after Appeals.) Both programs aim to expedite tax dispute resolution and foster greater collaboration, particularly for taxpayers seeking to avoid litigation. The two-year test period allows the IRS to collect data on participation rates, settlement outcomes and taxpayer satisfaction before deciding whether to make the change permanent.

How tax professionals can use PAM

Tax practitioners can play a key role in determining whether PAM is right for a client’s case. Here’s how to prepare:

1. Evaluate eligibility. PAM applies only after the appeals process concludes without a full resolution. Review whether the dispute meets the program’s requirements before recommending it.
2. Prepare for a new audience. Because a different appeals team will handle the mediation, reframe your arguments and evidence to ensure clarity for new reviewers.
3. Consider a co-mediator. Taxpayers may bring a co-mediator at their own expense. This may be helpful in complex or high-value disputes.
4. Watch timing. Requests for mediation should be made only after the unsuccessful appeal concludes. Sessions are usually scheduled promptly once requests are accepted, with the goal of resolution within 60-90 days, so preparation is crucial.
5. Stay informed. Because this is a pilot, the IRS may issue updates, clarifications or adjustments to eligibility during the two-year test period.

PAM benefits and limitations

For taxpayers, PAM offers a low-cost, collaborative way to resolve disputes without going to court. Mediation can save time, reduce stress and maintain a more constructive relationship with the IRS. For practitioners, it’s an opportunity to guide clients through a structured, results-driven negotiation process and potentially resolve cases more efficiently.

However, the process has limits. PAM is voluntary and nonbinding. If no agreement is reached, the case may still move forward to litigation. Not all issues qualify for mediation; cases that are already in court, designated for litigation, or under consideration for designation for litigation are excluded from the program. Because the new appeals team will be unfamiliar with the case, a review of materials for clarity and concise presentation are crucial.

Why the pilot program matters for tax pros

The PAM pilot represents a shift in how the IRS manages disputes, emphasizing fairness and communication over confrontation. For clients who prefer certainty and efficiency, this new path may offer the best chance to resolve lingering disagreements. As a tax professional, understanding the PAM process allows you to offer strategic advice, strengthen client trust and reduce risk.

In an environment where taxpayers increasingly expect transparency and efficiency, programs like PAM show that the IRS is open to modernizing its approach.

Final thoughts

The IRS’s new Post Appeals Mediation pilot program provides another option for taxpayers and their representatives to resolve disputes more efficiently and collaboratively. With a two-year window to evaluate success, the program could set a new standard for how the IRS approaches post-appeal conflict resolution.

For tax professionals, this is an opportunity to stay ahead of change, expand your advisory role and help clients find a resolution without the cost and uncertainty of litigation. As the pilot unfolds, stay connected to IRS updates and be prepared to guide clients toward mediation when it is appropriate.