---
kind: "section"
citation: "26 U.S.C. § 7123"
title: "26"
title_heading: "Internal Revenue Code"
number: "7123"
heading: "Appeals dispute resolution procedures"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/7123"
units:
  - "Subtitle F — Procedure and Administration"
  - "Chapter 74 — Closing Agreements and Compromises"
---

# §7123. Appeals dispute resolution procedures

- (a) **Early referral to appeals procedures—** The [Secretary](/usc/26/7701.md?p=a-11-B) shall prescribe procedures by which any [taxpayer](/usc/26/7701.md?p=a-14) may request early referral of 1 or more unresolved issues from the examination or collection division to the Internal Revenue Service Independent Office of Appeals.
- (b) **Alternative dispute resolution procedures—**
  - (1) **Mediation—** The [Secretary](/usc/26/7701.md?p=a-11-B) shall prescribe procedures under which a [taxpayer](/usc/26/7701.md?p=a-14) or the Internal Revenue Service Independent Office of Appeals may request non-binding mediation on any issue unresolved at the conclusion of—
    - (A) appeals procedures; or
    - (B) unsuccessful attempts to enter into a closing agreement under [section 7121](/usc/26/7121.md) or a compromise under section 7122.
  - (2) **Arbitration—** The [Secretary](/usc/26/7701.md?p=a-11-B) shall establish a pilot program under which a [taxpayer](/usc/26/7701.md?p=a-14) and the Internal Revenue Service Independent Office of Appeals may jointly request binding arbitration on any issue unresolved at the conclusion of—
    - (A) appeals procedures; or
    - (B) unsuccessful attempts to enter into a closing agreement under [section 7121](/usc/26/7121.md) or a compromise under section 7122.
- (c) **Administrative appeal relating to adverse determination of tax-exempt status of certain organizations—**
  - (1) **In general—** The [Secretary](/usc/26/7701.md?p=a-11-B) shall prescribe procedures under which an organization which claims to be described in [section 501(c)](/usc/26/501.md?p=c) may request an administrative appeal ([including](/usc/26/7701.md?p=c) a conference relating to such appeal if requested by the organization) to the Internal Revenue Service Independent Office of Appeals of an adverse determination described in [paragraph (2)](#c-2).
  - (2) **Adverse determinations—** For purposes of [paragraph (1)](#c-1), an adverse determination is described in this paragraph if such determination is adverse to an organization with respect to—
    - (A) the initial qualification or continuing qualification of the organization as exempt from tax under [section 501(a)](/usc/26/501.md?p=a) or as an organization described in [section 170(c)(2)](/usc/26/170.md?p=c-2),
    - (B) the initial classification or continuing classification of the organization as a private foundation under [section 509(a)](/usc/26/509.md?p=a), or
    - (C) the initial classification or continuing classification of the organization as a private operating foundation under [section 4942(j)(3)](/usc/26/4942.md?p=j-3).

## Source credit

(Added Pub. L. 105–206, title III, § 3465(a)(1), July 22, 1998, 112 Stat. 768; amended Pub. L. 114–113, div. Q, title IV, § 404(a), Dec. 18, 2015, 129 Stat. 3118; Pub. L. 116–25, title I, § 1001(b)(1)(G), July 1, 2019, 133 Stat. 985.)

## Notes

### Editorial Notes

### Prior Provisions

A prior section 7123 was renumbered section 7124 of this title.

### Amendments

2019—Pub. L. 116–25 substituted “Internal Revenue Service Independent Office of Appeals” for “Internal Revenue Service Office of Appeals” wherever appearing.

2015—Subsec. (c). Pub. L. 114–113 added subsec. (c).

### Statutory Notes and Related Subsidiaries

### Effective Date of 2015 Amendment

Pub. L. 114–113, div. Q, title IV, § 404(b), Dec. 18, 2015, 129 Stat. 3118, provided that: “The amendment made by subsection (a) [amending this section] shall apply to determinations made on or after May 19, 2014.”