What are the 4 methods of dispute resolution?
The four methods of dispute resolution are negotiation, mediation, arbitration & litigation.
How does negotiation resolve a dispute?
Negotiation is a direct discussion targeting an agreement — without a third-party ruling. In tax matters, this signifies responding to a notice, submitting documents & proposing terms in parallel to the cash flow reality.
Common outcomes include:
- A monthly payment plan.
- Reduced penalties when you qualify.
- A corrected balance after fixing filing errors.
What is mediation and when is it useful?
Mediation leverages a neutral facilitator to assist both sides in reaching a voluntary deal. Taxpayer decides whether to accept the result. It functions when miscommunication blocks progress & a practical settlement is required without a court date.
What is arbitration?
Arbitration is a private process where an arbitrator reviews both positions & issues a decision. Such a ruling might be binding. It is standard in business contracts & employment disputes. In tax cases, it is less typical than other routes.
What does litigation mean in dispute resolution?
Litigation is taking the dispute to a court, where a judge decides the outcome under the law. This route is the most formal and it is generally the most expensive. And it runs on tight deadlines, which is why it tends to be a last step.
How do you select the correct method?
The initial start point should be the least formal route. And simply move upward only when you require a formal decision.
A decision order can be outlined as below:
- Gather the notice as well as the tax years involved and the supporting data
- Try negotiation first, as many tax problems end with an agreed fix
- Consider mediation if talks stall but both sides still want a settlement
- Move to litigation only when the facts or legal position should be decided by a judge
Maris & Associates can help you act promptly
Maris & Associates supports taxpayers in organizing the factual information, responding on time and picking a smart roadmap that complies with the situation. If you received an IRS or state letter, reach out to us to review it and map out next actions.