Small business owners and self-employed individuals who need to resolve factual or legal issues between themselves and the IRS can turn to the Fast Track Settlement (FTS) program in the IRS’s Small Business/Self-Employed Division. The program started as a pilot in 2006 and was made permanent in March 2017 through Revenue Procedure 2017-25.
What’s the goal?
The goal is to resolve applications accepted into the Fast Track Settlement program within 60 days. Settlement tends to be faster, less expensive, less risky and more flexible than litigation, the IRS says.
The FTS program is geared toward cases in the examination or collection stages that involve factual and legal issues, typically without regard to dollar amount. The program is available after an issue is fully developed — that is, after all necessary technical advice, valuation reports and other documentation have been received. Before an issue can be accepted into the FTS program, the taxpayer must have worked cooperatively with the IRS auditor and his or her manager to try to resolve it.
Not all cases are eligible for FTS. Frivolous issues, cases in which the taxpayer failed to cooperate and correspondence audits typically are excluded. The IRS must explain why a case wasn’t accepted, but the decision isn’t subject to appeal or judicial review.
How do you apply?
Either taxpayers, or IRS examiners or group managers, can initiate the FTS process, and both parties must agree to participate. To apply, the business owner or self-employed person and examiner jointly complete Form 14017, “Application for Fast Track Settlement.” The taxpayer also provides a written statement outlining his or her position on the disputed issues.
After the IRS accepts a case, a trained IRS mediator will help the taxpayer and the agency reach agreement. The taxpayer can either engage an authorized representative or represent him- or herself. The mediator can propose a settlement or consider proposals from either party.
A business owner or self-employed person can agree to or reject any proposal, and can withdraw from the process at any time. The FTS program doesn’t eliminate other options for resolving disputes, including the right to an appeals hearing. In addition to small businesses and the self-employed, some larger businesses, as well as tax-exempt and government entities, can avail themselves of separate FTS programs.
Would you benefit?
The FTS program can save time, money and stress. Your accounting professional can help you decide if your business is a candidate and would benefit from the program.
This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.