Not surprisingly, the bloated bureaucracy that is the IRS doesn’t move quickly—except when it comes to taking your money, of course!
We often speak to clients who are in the process of appealing IRS penalties and are upset with the length of time the process is taking. Fortunately, there is an option that can often speed up the process. It’s known as the “Fast Track Settlement” (FTS) process. Here are some key facts about the program, courtesy of a recent article on Forbes.com:
Who’s Eligible? Fast Track is generally available for all cases within the Large Business and International Division of the IRS (LB&I), and some outside it. Fast Track can be used to settle most issues. Fast Track can’t be used if the IRS says it wants to litigate an issue or if the taxpayer has submitted a request for Competent Authority assistance. Certain other issues are also excluded.
Two Hats? The IRS Auditor and the taxpayer meet with an IRS Appeals official. The Appeals official is acting as a neutral party. Of course, the mediator works for the IRS, but that’s true in a full-blown appeal too.
Advantages. The advantages of using FTS include:
• Quick resolution (i.e., within 120 days) of audit issues;
• One-page application;
• Consideration of the hazards of litigation;
• Preventing the accrual of the additional 2% interest imposed on large corporate underpayments;
• Withdrawal from the process at any time; and
• Retaining all traditional appeal rights.
Getting Started. Either the taxpayer or the IRS can suggest the FTS program. If the other party agrees, they contact the FTS Coordinator within LB&I or the Appeals FTS Program Manager to determine if FTS is appropriate. Both parties must complete an application.
The Form 5701 and the taxpayer’s written response should be included. Both the taxpayer and the taxpayer’s representative must be present during FTS, and the taxpayer’s representative must file a Power of Attorney.
Early Referral Option. An alternative to FTS is the Early Referral to Appeals. According to Publication 4539, this option is best utilized early in the examination process.
Appeal Rights. If the parties can’t resolve it, the case is closed but the taxpayer retains all appeal rights.
Success Rate? A reported 83% of cases accepted into FTS get resolved.
While the Fast Track Settlement program can be very successful in many cases, it is important that you understand that it’s not always the right option. Our tax code is incredibly complex, and without years of experience interpreting it, it may be hard for you to properly evaluate your options. At the The Law Office of Roderick H. Polston, our team takes pride in working closely with each taxpayer in order to determine the best course of action. Sometimes, this may mean taking advantage of the FTS program. Other times, this program is not in the best interest of the taxpayer in question. If you have questions about your IRS dispute, please don’t hesitate to contact us today!