Massachusetts Early Mediation Program Changing the Tax Appeals Landscape

The Massachusetts Department of Revenue’s new Early Mediation Program (EMP) is off to a very promising start.  The EMP expedites the normal appeals process and offers hope to taxpayers that desire to resolve tax disputes without prolonged litigation.  The Department indicated at a recent Boston Bar Association meeting that eight of the first 11 cases have resulted in settlements.  Commissioner Amy Pittner announced publicly earlier this year that the Department’s goal is that one-third of all eligible disputes will be mediated.

Only controversies with $250,000 or more of tax at stake are currently allowed into the program (this is down from the original $1 million threshold).  Either the taxpayer or the Audit Division may suggest participation in the EMP.  Early mediation can be initiated any time a controversy has been fully developed in the course of the audit, but in no event later than 30 days after the issuance of a Notice of Intent to Assess.  A taxpayer interested in the EMP must either submit a joint application with the Audit Division or one on its own.  The Department retains discretion to determine that the EMP is not appropriate.

Once accepted into the EMP, the parties need to reach a resolution within four months or they must reenter the normal appeals process.  The way the program works is that both the taxpayer and the Department must exchange position papers on the issues in controversy and submit them to the mediator (a representative of the Office of Appeals) prior to the mediation.  Any supplemental information needs to be provided prior to the mediation.  At the mediation, the parties present oral arguments on the issues and the mediator helps facilitate a settlement.  The mediation is not binding on either party.  The key to the success of the program is that both parties are required to have a person with settlement authority present at the mediation.

Catherine A. Battin
Catherine (Cate) A. Battin represents clients in state and local tax controversies at the audit, administrative and judicial levels in numerous jurisdictions. She provides national state tax strategies for clients on a full range of state tax issues, including income tax apportionment, nexus, combination and sales tax characterization of products and services. She has defended numerous internet sellers in cases brought under the Illinois False Claims Act alleging fraudulent failures to collect and remit use tax. Read Catherine A. Battin's full bio.

Richard C. Call
Richard C. Call focuses his practice on state and local tax litigation before administrative and judicial bodies, at all levels and in multiple states, with respect to income, franchise, gross receipts, and sales and use taxes. He also advises clients on the state and local tax consequences of business restructurings, as well as the impact of new state legislation on current business operations. Read Richard C. Call's full bio.

Scott M. Susko
Scott M. Susko counsels clients on all aspects of state and local tax matters. He represents individuals and businesses throughout the country at every stage of state and local tax controversies, including audit defense, administrative appeals and litigation. Scott also assists clients through changes in their business that can affect their tax posture, such as entry into new geographic or product markets, merger and acquisition activity, or state legislative developments. Read Scott M. Susko's full bio.




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