IRS Establishes Small Business/Self-Employed Fast Track Settlement Program

On March 20, 2017, the IRS issued Rev. Proc. 2017-25 to formally establish the Small Business/Self-Employed Fast Track Settlement program (SB/SE FTS) to provide an expedited format for resolving tax controversies. The process employs various alternative dispute resolution techniques to promote case resolution.  An Appeals Officer mediates between the parties, and either the taxpayer or the IRS may agree to or reject any settlement proposal by Appeals.

The IRS started SB/SE FTS as a pilot program over 10 years ago, and extended it into a nationwide program in IR-2013-88. SB/SE taxpayers that have unagreed factual or legal issues and at least one open year under exam can work with SB/SE and Appeals to resolve the issues while the case is still in exam and preserve the taxpayer’s ability to request an Appeals hearing. SB/SE FTS may be initiated any time after an issue is fully developed, and the process should be completed within 60 days after acceptance into the program.

SB/SE FTS does not apply to cases under TE/GE due to a separate FTS program for TE/GE taxpayers. FTS is also not available in certain circumstances (e.g., where the taxpayer did not act in good faith during the audit, where the case was worked solely in a Campus/Service Center site, in TEFRA cases, in collection cases, where issues are designated for litigation, where issues are docketed in any court, etc.)  If any one issue is not eligible for FTS, no issues in the case are eligible for FTS.  Taxpayers who use FTS are ineligible to use post-appeals mediation for any issue considered during FTS if the parties fail to resolve the issue or if either withdraws.

SB/SE FTS is a helpful process for taxpayers and the IRS to resolve issues before the parties engage in the more formal IRS Appeals process or litigation. FTS offers flexibly, speed, and reduced costs to resolve disputes but gives both the taxpayer and IRS exam team control to withdraw from the process. For those SB/SE taxpayers interested in FTS they can apply using Form 14017.

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