MA DOR Offers Taxpayers a Faster Way to Settle Tax Disputes

Successful pilot program becomes permanent option for more taxpayers

(Boston, MA)-The Massachusetts Department of Revenue (DOR) is giving taxpayers a new option for settling tax disputes quicker 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 four months on average 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 works so well is because hearing officers who act as neutral facilitators are trained in mediation techniques while auditors and attorneys representing the department are educated about 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.

 Since the pilot ended, four additional corporate taxpayers with more than $22 million in tax assessments have signed up for the early mediation program and at least two cases settled during the first mediation session.

For details on the Early Mediation Program, please visit Early Mediation Administrative Procedures on the DOR website.