Introduction Advantages
Fast Track Settlement (FTS) offers taxpayers a The advantages of Fast Track Settlement include: circumstances and exhaust LB&I resolution
way to resolve audit issues during the examination authority on the issues. After issuance of a Form
process in 120 days or less. Working with the Large • Quicker resolution of audit issues (120 days or less) 5701, and the receipt of a written response from
Business and International Division (LB&I) and • No need for a formal protest to request FTS the taxpayer, either the taxpayer or the LB&I
Appeals, taxpayers can use the settlement authority Team Manager (i.e. the parties) may suggest
• A one-page application participation in the FTS program. If the other
and mediation skills of Appeals while shortening
their overall experience with the Internal Revenue • Delegation Order 4-24 (formerly 236, Rev.3) can be party agrees, the parties may contact the LB&I
Service. FTS reduces the combined LB&I-Appeals used in the next audit cycle FTS Coordinator or the Appeals FTS Program
process time significantly. • Consideration of hazards of litigation Manager to determine if FTS is appropriate. To
apply, the parties must complete and execute
LB&I and Appeals organizations are committed to • No ‘hot‘ interest under IRC §6621 an Application for FTS. Both the Form 5701 and
supporting the Service-wide initiative of reducing • Withdrawal from the process at any time the taxpayer’s written response will be part of the
the time it takes for taxpayers to complete the application package to help the FTS Program
• Retention of all traditional appeal rights
examination and resolution processes. FTS is key to Manager understand the issue(s) in dispute,
• One tax computation determine if the issue(s) is sufficiently developed
accomplishing this goal.
• Case closes agreed in LB&I to permit resolution and accept the application
into the FTS program.
Who can use Fast Track Settlement?
Excluded Cases / Issues
If the issue(s) is not ready for FTS, the LB&I
FTS is generally available for all cases within LB&I’s FTS Coordinator and Appeals FTS Program
Fast Track Settlement is not available in certain
Compliance jurisdiction and works best when Manager will advise what additional development
situations for example, issues:
unagreed issues are limited in number. FTS can also might improve the chances for a successful
be effectively used in LB&I’s Compliance Assurance • Designated for litigation; FTS outcome. They may also suggest other
Process (CAP) to assist in resolving disputed issues Alternative Dispute Resolution processes.
• For which the taxpayer has submitted a request for
before the tax return is filed. When it is in the best Competent Authority (or simultaneous Appeals/Competent
interest of tax administration, only one issue may be Authority) assistance; Appeal Rights & Ex Parte
accepted into FTS while the audit continues. Cases Communications
• That are “whipsaw” issues, i.e., issues for which resolution with
outside LB&I’s jurisdiction (from other IRS Operating respect to one party might result in inconsistent treatment in
Divisions) may also qualify for FTS. the absence of the participation of another party; When the issues are resolved, or a decision
is made that a resolution cannot be reached,
Fast Track Settlement is available for most: • Not consistent with sound tax administration; or the case will be closed promptly. If the case
• Excluded from the FTS process by a Chief Counsel or issue is not settled, the taxpayer retains
• Factual and legal issues Notice, or equivalent publication. all traditional appeal rights. Appeals will not
• Listed transactions prepare an Appeals Case Memorandum, and the
Getting Started administrative file will be returned to LB&I without
• Appeals & Compliance Coordinated Issues Appeals’ notes. Caution: Written documents
• Issues requiring hazards of litigation settlement When it appears there may be unagreed issues disclosed by the taxpayer during the FTS process
raised during the examination process, the taxpayer become available to LB&I and may be used in its
and LB&I Team Manager should have an early determination.
discussion regarding possible use of the FTS
process. Prior to issuance of Form 5701 (Notice
of Proposed Adjustment), the LB&I team and
the taxpayer should agree on all the facts and