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IRS’s small business fast track settlement program goes nationwide

November 7, 2013

IRS has announced the nationwide rollout of the Fast Track Settlement (FTS) program, which had previously been available only as a pilot program limited to certain jurisdictions. The FTS program is a streamlined program designed to help small businesses and self-employed individuals who are under examination by IRS’s Small Business/Self Employed (SB/SE) Division more quickly settle their differences with IRS.

Background. SB/SE originally launched FTS as a pilot program for small businesses and self-employed individuals in September of 2006. (Ann. 2006-61, 2006-2 CB 390) In January of 2011, IRS expanded the FTS programs to certain specified locations: Chicago, IL; Houston, TX; St. Paul, MN; Philadelphia, PA; central New Jersey; and San Diego, Laguna Niguel, and Riverside, CA. (Ann. 2011-5, 2011-2 IRB 430)

Subject to certain limitations set out in Ann. 2011-5, some of which are covered below, FTS is generally available for cases under the jurisdiction of the SB/SE Division if:

 

  • issues are fully developed;
  • the taxpayer has stated a position in writing (or filed a small case request for cases in which the total amount for any tax period is less than $25,000, as described in IRS Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don’t Agree); and
  • there are a limited number of unagreed issues.

 

FTS is not available for a host of cases and issues that are set out in Ann. 2011-5, including:

 

  • Collection Appeals Program, Collection Due Process, Offer-In-Compromise and Trust Fund Recovery cases, except as provided in any guidance issued by IRS;
  • Issues designated for litigation; and
  • “Whipsaw” issues, i.e., issues for which resolution with respect to one party might result in inconsistent treatment in the absence of the participation of another party.

 

Nationwide FTS program. In IR 2013-88, IRS announced the nationwide rollout of the FTS program. FTS, which is jointly administered by SB/SE and the IRS Appeals office, is modeled on a similar program that has long been available to large and mid-size businesses (i.e., those with more than $10 million in assets). FTS is designed to expedite case resolution. It uses alternative dispute resolution techniques to help taxpayers save time and avoid a formal administrative appeal or lengthy litigation. As a result, audit issues can usually be resolved within 60 days, rather than months or years. IRS emphasizes that taxpayers choosing this option lose none of their rights because they still have the right to appeal if the FTS process is unsuccessful.

Under FTS, taxpayers under examination with issues in dispute work directly with IRS representatives from SB/SE’s Examination Division and the IRS Appeals office to resolve those issues, with the Appeals representative typically serving as mediator. The taxpayer or the IRS examination representative may initiate Fast Track for eligible cases, usually before a 30-day letter is issued. The goal is to complete cases within 60 days of acceptance of the application in Appeals.

A taxpayer who is interested in participating in the SB/SE FTS, or who has questions about the program and its suitability for the taxpayer’s case, can contact the Examination or Specialty Program group manager. To apply for the SB/SE FTS program, the taxpayer and the group manager need to submit Form 14017, Application for Fast Track Settlement, and the taxpayer’s “brief, concise and soundly written” response to IRS’s position. See Alternate Dispute Resolution, at http://www.irs.gov/Individuals/Alternative-Dispute-Resolution .