The Internal Revenue Service (IRS) has published guidelines for a Fast Track Settlement (FTS) program that small businesses and self-employed individuals can utilize when they are undergoing an audit by the Small Business/Self Employed Division of the IRS.
The goal of the Fast Track Settlement program is to provide alternate resolution methods other than litigation that taxpayers can use to settle audit issues more quickly than has been possible historically.
The Small Business/Self Employed Division and IRS Appeals Office oversee the Fast Track Settlement program. The program provides for a mediation session between the taxpayer and the IRS examiner assigned to a case. The mediation session takes place at a location agreed to by both parties. A representative of the IRS Appeals Office usually serves as the mediator in these sessions.
Benefits of Fast Track Settlement
The benefits of the Fast Track Settlement program to the taxpayer include the following:
- Application for the program using a one-page form, IRS Form 14017 Application for Fast Track Settlement
- Settlement of audit issue within 60 days of acceptance of the case into the Fast Track Settlement program
- Avoidance of interest calculated under IRC 6621 for any underpayment of business tax
- Option to withdraw from the program at any time
- Avoidance of the hazards associated with settlement using litigation
- Retention of traditional rights to appeal any decision reached as a part of Fast Track Settlement
Eligibility for Fast Track Settlement
Fast Track Settlement is available to small businesses and self-employed individuals in the following cases:
- The audit issue under dispute is between the taxpayer and the Small Business/Self Employed Division of the IRS
- The audit issue under dispute is fully developed
- The taxpayer has provided his position on the audit issue to the IRS in writing
- The number of audit issues under dispute is limited
Fast Track Settlement with the Small Business/Self Employed Division is not available when any of the following are true concerning the audit issue:
- Issues stemming from considered under certain other IRS programs, including Offer-In-Compromise and Collection Due Process cases
- Issues where the taxpayer has not responded to previous IRS communications or otherwise submitted documentation to the IRS on the issue
- Issues outside the jurisdiction of the Small Business/Self Employed Division
- Issues where the IRS has already begun consideration to designate the issue for litigation or actually designated the issue for litigation
- Issues where the taxpayer has submitted the issue to the U.S. competent authority as defined in Revenue Procedure 2006-54
- Issues deemed frivolous
- Issues deemed to be a whipsaw issue, where resolution of the issue in favor of the taxpayer would create tax implications for another party who is not participating in the Fast Track Settlement session
- Any issue identified as specifically excluded from the Fast Track Settlement process by a Chief Counsel Notice
In the event any one component of an audit issue is deemed to be ineligible for the Fast Track Settlement program, the entire audit issue will be considered ineligible for the Fast Track Settlement program.
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Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.