Formerly available only to large and midsize businesses and in a geographically limited pilot program for smaller entities, the IRS’s Fast Track Settlement program is now available to smaller businesses nationwide, the IRS announced Wednesday, November 6.
Fast-track settlement allows the IRS and business or self-employed taxpayers under examination to use alternative dispute resolution procedures to resolve tax controversies more quickly, without a formal administrative appeal or litigation. The program began on a pilot basis in 2001 for businesses over which the IRS’s Large and Mid-Size Business Division (LMSB, now the Large Business and International Division) had jurisdiction—those with more than $10 million in assets.
It was extended to LMSB taxpayers nationally in 2003. Three years later, the IRS launched a pilot program for taxpayers under the Small Business/Self-Employed Division (SB/SE) in Chicago, Houston, and St. Paul, Minn. (see Announcement 2006-61). The pilot program was expanded in 2007 to include Philadelphia, central New Jersey, and three California cities (News Release IR-2007-200).
Under SB/SE fast-track settlement, taxpayers with one or more unagreed issues in an open year or years under examination can work to resolve the issues with SB/SE and the IRS Office of Appeals, generally before the IRS issues a first notice of proposed deficiency (30-day letter). The parties aim to settle cases within 60 days of acceptance of an application to the program.
Generally, for a case to be eligible for fast-track settlement, issues must be fully developed, the taxpayer must state a position in writing, and there must be a limited number of unagreed issues. Fast-track settlement is not available for Collection Appeals Program cases, Collection Due Process cases, offers-in-compromise, trust-fund recovery cases, certain correspondence examination cases, and others identified in Announcement 2011-5.
If the application is accepted, an IRS Appeals official trained in mediation serves as a neutral party to propose and facilitate a settlement agreement between the taxpayer and SB/SE representatives through one or more conferences. If the parties are unable to resolve the issue or issues, the taxpayer may still request a traditional appeal.
By Paul Bonner (email@example.com) is a Journal of Accountancy senior editor.
Edited and posted by Harold Goedde CPA, CMNA, Ph.D., accounting and taxation
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