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and exhaust LMSB resolution authority on the issues.
INTRODUCTION ADVANTAGES Only after issuance of a Form 5701, and the receipt
of a written response from the taxpayer, either the
Fast Track Settlement (FTS) offers taxpayers a way The advantages of Fast Track Settlement include: taxpayer or the LMSB Team Manager (i.e. the parties)
to resolve audit issues during the examination • Quicker resolution of audit issues (120 days may suggest participation in the FTS program. If the
process in less than 120 days. Working with Large or less) other party agrees, the parties may contact the LMSB
and Mid-Size Business Division (LMSB) and Appeals, or Appeals Fast Track contacts (see FTS contacts
taxpayers can utilize the settlement authority and • No need for a formal protest to request FTS at the end of this publication) to determine if FTS is
mediation skills of Appeals while shortening their • A one-page application appropriate. To apply, the parties must complete and
overall experience with the Internal Revenue Service. • Delegation Order 236, www.irs.gov/pub/irs-utl/ execute an Application for Fast Track Settlement. Both
Successful from the taxpayer’s perspective, FTS do_236.pdf, can be utilized in the next audit the Form 5701 and the taxpayer’s written response will
reduces the combined LMSB-Appeals process time by cycle be part of the package to assist the Fast Track contacts
at least two years. to understand the issue(s) in dispute, determine if the
• Consideration of hazards of litigation
Both the LMSB and Appeals organizations are issue(s) is sufficiently developed to permit resolution
committed to supporting the Service-wide initiative of • No ‘hot‘ interest under IRC 6621 and decide to accept into the program.
reducing the time it takes for taxpayers to complete • Withdrawal from the process at any time
If the issue(s) is not ready for FTS, the LMSB
the examination and resolution processes. Fast Track • Retention of all traditional appeal rights and Appeals contacts will advise what additional
Settlement is key to accomplishing this goal. • One tax computation development might improve chances for a successful
• Case closes agreed in LMSB FTS outcome. They may also suggest other alternative
resolution processes.
WHO CAN USE FTS?
EXCLUDED CASES / ISSUES
FTS is generally available for all cases within LMSB APPEAL RIGHTS &
Compliance jurisdiction and works best when five Fast Track Settlement is not available in certain EX PARTE COMMUNICATIONS
or fewer issues are to be considered during the situations, for example, issues in your case:
process. FTS can also be effectively used in LMSB’s • Designated for litigation; When the issues are resolved, or a decision is made that
new Compliance Assurance Process (CAP) to assist in a resolution cannot be reached, the case will be closed
resolving disputed issues before the tax return is filed. • For which you have submitted a request promptly. If the case is not settled, the taxpayer retains
When it is in the best interest of tax administration, for Competent Authority (or simultaneous all traditional appeal rights. Appeals will not prepare an
only one issue may be accepted into FTS while the Appeals/Competent Authority) assistance; Appeals Case Memorandum, and the administrative
audit continues. Cases outside LMSB’s jurisdiction • That are “whipsaw” issues, i.e., issues for file will be returned to LMSB without Appeals’ notes.
(from other IRS Operating Divisions) may also qualify which resolution with respect to one party If any issues remain unresolved at the conclusion of
for Fast Track Settlement; see section 3.02 of Revenue might result in inconsistent treatment in the the Fast Track Settlement process, the taxpayer retains
Procedure 2003-40 (available on the IRS Website, absence of the participation of another party; all of its otherwise applicable appeal rights. Caution:
http://www.irs.gov/pub/irs-drop/rp-03-40.pdf • Not consistent with sound tax administration; Written documents disclosed by the taxpayer during
or the Fast Track process become available to LMSB and
may be used in their determination.
FAST TRACK SETTLEMENT IS • Excluded from the Fast Track Settlement
AVAILABLE FOR MOST: process by a Chief Counsel Notice, or The prohibition against ex parte communications
equivalent publication. between Appeals Officers and other Service employees
• Factual and legal issues provided by section 1001 (a) of the Internal Revenue
Service Restructuring and Reform Act of 1998 does
• Listed transactions GETTING STARTED
not apply to the communications arising in Fast Track
• Appeals & Compliance Coordinated Issues Settlement because Appeals personnel, in facilitating
When it appears that the taxpayer may not agree
• Issues requiring hazards of litigation an agreement between the taxpayer and LMSB, are
with issues raised during the examination process,
settlement not acting in their traditional Appeals settlement role.
the taxpayer should have an early discussion with
the LMSB Team Manager on possible use of the
FTS process. Prior to issuance of Form 5701 (Notice
of Proposed Adjustment), the LMSB team and the
taxpayer should agree on all the facts and circumstances
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