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IRS Permanently Establishes Fast Track Settlement Program for Small Businesses

In March, the IRS officially rolled out a Fast Track Settlement program (FTS) for small businesses and self-employed individual taxpayers. The FTS for small businesses is in effect for businesses that file Form 1040, Schedules C, E, F or Form 2106. Moreover, it applies to small businesses with assets less than $10 million. The IRS claims that the FTS can resolve disputes "within 60 days after acceptance into the program."

How does the Fast Track Settlement program work?

Companies enrolled in the FTS, along with a Small Business Examiner or Small Business Group Manager of the IRS, try to resolve their issues before an IRS Appeals Officer who serves as a neutral mediator of the dispute. The mediator's goal will be to help the taxpayer and the IRS reach agreement. It is understandable that some companies may be concerned about the impartiality of the Appeals Officer. In its own documentation, the IRS acknowledges that an unbiased mediator is critical to the success of the program.

What businesses are eligible for the Fast Track Settlement program?

The FTS for small businesses has been the subject of various pilot programs for more than ten years. In officially establishing the FTS, the IRS has laid out various criteria, including:

  • The tax controversy contains legitimate factual and legal issues that have been fully developed.
  • The taxpayer has supplied the IRS with adequate documentation prior to entry in the FTS.
  • The issues between the taxpayer and IRS have not been resolved after the intervention of an IRS Group Manager.

There are other situations in which the FTS does not apply. For instance, tax-exempt companies cannot use the FTS, although tax-exempt companies have their own accelerated settlement program. Cases involving innocent spouse claims and cases involving collection of tax debts, such as offers in compromise and collection due process claims, are not eligible for the FTS. Furthermore, the IRS can refuse to allow programs in the FTS if they believe the issues are not "in the interest of sound tax administration."

Is the Fast Track Settlement program right for every business facing tax disputes?

In a word, no. The IRS itself acknowledges that not all disputes are appropriate for the FTS. Depending on the circumstances, a business may be better off resolving disputes in litigation. Experienced legal counsel can help your company determine whether the Fast Track Settlement program is in your best interests. Based in Manhattan and serving taxpayers across the United States and the world, the attorneys of Goldburd McCone LLP provide exceptional representation in the complete range of tax controversies.

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