Mediation as the Most Effective Forms of ADR in Resolving Tax Disputes

Among all of the previously mentioned ADR, mediation is found as the most effective way of resolving tax disputes. Mediation is well recognized universally as a tool to come up with meaningful solutions of tax disputes. Mediation can be defined as a structured negotiation process in which a neutral third party, the mediator, who is independent of the parties, assists the parties to agree on their own solution to their dispute, by assisting them systematically to isolate the issues in dispute, to develop options for their resolution and to reach an agreement which accommodates as much as possible the interests of all the disputants. (Leadr mediation workshop, 1994). Mediation plays an important role in resolving tax conflict under a third party specifically the mediator who actually assists the disputants to resolve their own conflict. In the process, both the parties attend voluntary to resolve disputes arisen from tax related issues. However, the mediator does not participate in the result of the mediation process. The disputing parties themselves have control over the agreements to be reached. So, the process provides the disputants the opportunity to find solutions to their own conflicts. According to Fayle (1999), mediation involves a search for the underlying issues the real reasons why parties are in dispute. Once these reasons are known (at least to the mediator), the settlement is more likely. It implies that the mediator actually finds the reasons of the disputes and helps both parties to come up with a probable solution where mediator himself does not actively provide any solution. There are indeed so many advantages in using mediation as a tax disputes resolution mechanism:

Non-adversarial process Less-expensive Assures confidentiality, impartiality and neutrality Procedures are non-legalistic Avoids delays which occurs in litigation process Flexibility in discussion, private caucusing and negotiation

Ensuring the acceptance of the outcome by both parties, thereby enhancing sustainable peace. (Fayle, 1999)

Comparative Analysis between Mediation and Different Forms ADR in Resolving Tax Disputes
Universally, mediation has been recognized as the most effective way compared to other types of ADR technique such as arbitration, conciliation, adjudication and other popular techniques. The question is why mediation is more effective in resolving tax disputes than most other techniques. Tax disputes often involve a number of tax payers who may operate under particular tax shelter arrangements. As a result, these issues need particular attention from the both parties involved in such cases. In mediation, the process offers participatory solution fixed by both parties. Since the result comes from the parties rather than the mediators, mediation expedites the process of solution to the problems. Apart from that, resolving tax disputes requires adequate discussion and expert opinions. Mediation provides scope to obtain opinions from experts and empowers participants to speak for themselves and determine the outcome of their own dispute. As a result, it enables both the parties to evolve an outcome that better meets their needs than a judicial decision. Moreover, this process is cheaper as both the parties sit voluntary in a private setting with an approach to reach a solution through discussions facilitated through a mediator. (Jone & Maple, 2012)

Arbitration vs. mediation

In many tax cases people go for arbitration. However, in arbitration, the participants have lack of scope to go for detail discussion and and reach a solution for such disputes which is essential for resolving tax disputes. Whereas mediation is less stressful and quicker, arbitration can be prolonged and rigid in terms of discussions and negotiation. In addition, arbitration may have formal procedure thwarting participants involvement. On the other hand, mediation is informal and confidential and therefore more accommodating of direct participant involvement. As a result, mediation produces an agreement that is more likely to be complied with and which may be more likely to finally resolve the dispute by improving personal/business relationships (Jone & Maple, 2012). However, in arbitration, the judgment is solely determined by the

arbitrator and the judgments are binding on both the parties without scope of appeal except for certain cases. As a result, its not that effective in resolving tax disputes in which discussions and negotiation are needed in informal setting with scopes of solution coming from both the parties.

Conciliation vs. Mediation

Conciliation is another dispute resolution process which focuses on building peaceful relationship with parties on solving the disputes although it is basically different than mediation in several aspects. Conciliation seeks towards the best solution by directing parties towards a satisfactory common agreement. In spite of his close similarity to mediation, there are important differences between the two methods of dispute resolution. (Squibini, Prieditis & Marighetto ,2004) The role of the conciliator is more direct in resolving the tax disputes. In conciliation, conciliator sometimes even advices the parties certain solution by making proposal for settlement whereas the role of the mediator in mediation is like a liaison officer who just helps to expedite the negotiation rather than proposing solution. Here, conciliator plays the main role in developing solution and often offer the terms of the settlement. However, in mediation, mediator has no role in proposing solution or developing the terms of the solution. Mediator roles are only to facilitate the proceeding in which the parties by themselves develop their solution and the terms of the procedure. In conciliation, the neutral is usually seen as an authority figure that is responsible for the figuring out the best solution for the parties whereas in mediation the parties are seen as the responsible persons for finding out the solution. In mediation, the mediators role is to create an environment in which further discussion can move on. Although parties can seek advice from the mediators in issues in which they find difficulty to resolve, the main outcome will be evolved by the discussion and negotiation of both the parties involved in it. (Squibini, Prieditis & Marighetto ,2004) According to Jone and Maple (2012), tax disputes resolved quickly in the procedure in which procedural justice concerns the perceived fairness of the procedures involved in decisionmaking and the perceived treatment one receives from the decision maker. Since tax disputes require solution arisen from the parties involved in the disputes, there are few roles of others to take decision including the mediator. As a result, mediation is more effective than the conciliation because in conciliation procedural justice can be questioned by the parties

involved in. However, in many cases conciliation can be used as an effective tool, specially, in which the parties have lack of depth of knowledge or experience to resolve such issues. As in mediation solution arises from the midst of the parties without the intervention of mediators, mediation is more effective than conciliation.

Adjudication Vs Mediation
Mediation has certain advantages over adjudication in tax disputes except in withholding payment without following the correct procedures. Adjudication is another adversarial process where one party wins and other party losses but it is different from litigation in a sense that in adjudication the losing party only becomes liable for the adjudicators fees and each party stands their own costs. So the award doesnt follow the cost in adjudication. Mediation however is nonadversarial and seeks to find a solution to the dispute which is acceptable to both parties, thus also attempting to preserve the business relationship. (Dawson, 2011) In an adjudication process the outcome is given solely by the adjudicator without the involvement of the parties involved in it. As a result, parties have no control over the outcome of the case. Although dissatisfied parties can go for arbitration or litigation, this action simply bring about the adversarial methods, again with no guarantee of success. In mediation, each party has the right to discuss and negotiate and is not forced to abide the terms of the settlement if the party does not wish to do so. (Dawson, 2011) Moreover, mediation process is more quick and easy to prepare with low cost whereas adjudication follow complex procedure requiring much time. In addition, mediation is less costly and highly confidential. Generally, companies are unwilling to reveal the secrets of their business in front of others. Therefore, mediation is definite choice for the companies to go for mediation rather than going for adjudication. In addition high cost also hinders companies to go for adjudication. Since tax disputes requires high flexibility of controlling the outcome of the disputes as well as confidentiality, mediation is an automatic choice for the companies. In addition, the nonadversarial natures also help the resolution of tax disputes since it provides the both party opportunities to discuss and negotiate in terms and agreement.

Recommendation
Since arbitration and adjudication are closely similar having an adversarial nature both are highly ineffective in resolving tax disputes. Although conciliation is noticeably similar to the mediation, it fails to resolve the solution as the final outcome and terms are proposed by the conciliator. On the other hand, mediation has a non-adversarial nature as well as high confidentiality which result in a peaceful solution of the disputes. Therefore, its recommended to use mediation in resolving tax disputes. Reference Fayle, R. (1999). Mediation in tax disputes. Journal of Australian Taxation, 2(2), Retrieved from http://www.buseco.monash.edu.au/blt/jat/1999-issue2-hill.pdf Dawson, M. (2011, November 11). Adjudication versus mediation Chartered Institute of Building Magazine of the Chartered Institute of Building, Retrieved from http://www.construction-manager.co.uk/news/adjudication-versus-mediation/ Jone, A., & Maples , A. J. (2012). Mediation as an alternative option in australias tax disputes resolution procedures. (Master's thesis, University of Canterbury)Retrieved from http://www.google.com.bd/url?sa=t&rct=j&q=mediation as an alternative option in australias tax disputes resolution procedures&source=web&cd=1&cad=rja&ved=0CCoQFjAA&url=http://www.civiljustic e.info/cgi/viewcontent.cgi?article=1003&context=med&ei=wEEkUtimDoGHrgfbj4AI&u sg=AFQjCNF1NDedsaXtogW4wSVYareecezv4w&bvm=bv.51495398,d.bmk Leadr mediation workshop course notes. (1994). Informally published manuscript, Retrieved from http://www.google.com.bd/url?sa=t&rct=j&q=mediation in tax disputes&source=web&cd=1&cad=rja&ved=0CDUQFjAA&url=http://www.civiljustice. info/cgi/viewcontent.cgi?article=1003&context=med&ei=xoQjUvSQLIWJrQeHk4GoBQ &usg=AFQjCNF1NDedsaXtogW4wSVYareecezv4w

Squibini, A., Prieditis, M., & Marighetto , A. (2004). Arbitration, mediation and conciliation: Differences and similarities from an international and Italian business perspective. Retrieved from http://www.mediate.com/articles/sgubinia2.cfm