Small business owners and self-employed individuals who are looking to settle factual or legal issues between themselves and the IRS, can use the Fast Track Settlement (“FTS”) program made available by 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 Objective?
The objective is to settle applications accepted into the Fast Track Settlement program within 60 days. Settlement under this program tends to be quicker, cheaper, less risky and more flexible than litigation, the IRS says.
The FTS program is designed to handle cases which are either in the examination or collection stages, and involve factual and legal issues, typically for any total dollar amount. The program is available once an issue is fully developed — meaning, after all the necessary technical advice, valuation reports and any other documentation have been received. Before the issue can be entered into the FTS program, the taxpayer must have worked cooperatively with the IRS auditor and their manager to try to resolve it.
Not every case will be eligible for FTS. Frivolous issues, cases without taxpayer cooperation and correspondence audits typically are excluded from the program. The IRS is required to state why a case wasn’t accepted, but that decision isn’t subject to either an appeal or judicial review.
How Do You Apply?
Any party — either taxpayers or IRS examiners, or even the group managers, can begin the FTS process, though both parties must agree to participate. In order to apply, the business owner or self-employed person and examiner would jointly complete Form 14017, “Application for Fast Track Settlement.” The taxpayer would also complete a written statement outlining his or her position on all of the issues under dispute.
Once the IRS accepts a case, a trained IRS mediator will work with both the taxpayer and the agency to reach an agreement. The taxpayer can either engage an authorized representative or represent himself or herself. The mediator can propose a settlement or consider proposals from either party.
A business owner or self-employed person can then agree with or reject any proposal, and also maintain the ability to withdraw from the process at any time. The FTS program will not 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 certainly has the possibility to save you time, money and aggravation. Your accounting professional can help you decide if your business is a candidate and if you may be able to benefit from the program.