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IRS rolls out fast-track settlement program

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in Small Business Tax,Small Business Tax Deduction Strategies

The IRS has announced a nationwide rollout of its “fast track settlement” (FTS) program. (IRS Information Release IR-2013-88) Previously, the program was available only in certain specified jurisdictions.

Strategy: Use the FTS program to settle differences with the IRS. It is designed to help small businesses and self-employed individuals under examination by the IRS Small Business/Self Employed (SB/SE) Division.

The FTS program is modeled on a similar IRS program for large and midsize businesses (i.e., those with more than $10 million in assets).

Here’s the whole story: In 2006, the SB/SE division launched the FTS as a pilot program for small businesses and self-employed individuals in 2006. It expanded the pilot program in 2011 to Chicago; Houston; St. Paul, Minn.; Philadelphia; central New Jersey; and San Diego, Laguna Niguel and Riverside, Calif. (IRS Announcement 2011-5)

According to Announcement 2011-5, the FTS program 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 in which the total amount for any tax period is less than $25,000).
  • There are a limited number of contested issues.

Now the IRS says that FTS is available to small businesses and self-employeds around the country. It expedites case resolution through alternative dispute resolution techniques. Thus, it can help avoid formal administrative appeals or lengthy litigation. Audit issues are usually resolved within 60 days, rather than months or years.

Under the FTS program, taxpayers work directly with IRS representatives from SB/SE Examination Division and the IRS Appeals office to resolve issues. Typically, the Appeals representative will serve as mediator. The taxpayer or the IRS examination representative may initiate the FTS process for eligible cases before a 30-day letter is issued. The goal is to complete cases within 60 days of acceptance of the application in Appeals.

For more details, taxpayers can contact the Examination or Specialty Program group manager. To apply for the program, a taxpayer must submit Form 14017, Application for Fast Track Settlement, and provide a “brief, concise and soundly written” response to the IRS’ position.

Tip: The IRS emphasizes that taxpayers still have the right to appeal if the FTS process is unsuccessful.

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