Fast Track Settlement program extended to small business.

• Author: Yuskewich, J. Matthew

In Ann. 2006-61, the IRS provided guidelines to extend the Fast Track Settlement (FTS) program to small business and self-employed taxpayers. Beginning Sept. 5, 2006, the Service initiated a six-month test program for certain of these taxpayers, within its Small Business/Self Employed (SB/SE) organization, in Chicago, Houston and St. Paul. After the six-month period, the IRS will evaluate the program, consider necessary adjustments and decide whether to continue testing FTS for SB/SE taxpayers for an additional 18 months. If the program is continued, it will be available to qualifying taxpayers nationwide. When the two-year test ends, the program will again be evaluated and a decision made as to whether to make the program permanent.

The procedures for using FTS for SB/SE taxpayers will generally follow those published for the Large and Mid-Size Business (LMSB) FTS Dispute Resolution Program in Rev. Proc. 2003-40. Since FTS began for LMSB in 2001, many taxpayers have successfully used it to resolve cases at the examination level and avoid an otherwise lengthy appeals process or litigation.

Eligible Cases/Application

FTS is generally available for SB/SE cases if (1) the issues are fully developed, (2) the taxpayer has stated a position in writing or filed a small-case request and (3) there are a limited number of unagreed issues. Generally, the program is not available for Collection Appeals Program, Collection Due Process, Offer-In-Compromise, Trust Fund Recovery and others cases out-lined in Ann. 2006-61. If any issue is determined to be ineligible for the FTS program, none of the issues in the case will be eligible. The SB/SE Group Manager and the taxpayer will evaluate the circumstances to determine if this process is appropriate.

To apply for the FTS program, the taxpayer and SB/SE Group Manager submit an SB/SE-Appeals FTS Application (application) to the local Appeals Team Manager. The process may be initiated by the taxpayer, Examining Agent or Group Manager at any time after an issue has been fully developed, but preferably before a 30-day letter has been issued. (Ann. 2006-61 contains a sample application.) A summary of issues prepared by the SB/SE Compliance Team and a written response by the taxpayer should be included with the application. If the case is not accepted, the taxpayer will be informed of the basis for the decision and alternative dispute resolution opportunities will be discussed. The decision not to accept a case...