Posted by Jeffrey Feingold on 03.28.17
In welcome news for taxpayers who work for themselves and businesses with assets under $10 million, the IRS has made permanent an expedited process it had been pilot testing by which small businesses and self-employed individuals (SB/SE) can resolve tax disputes.
The Fast Track Settlement (FTS) program uses alternative dispute resolution techniques to save taxpayers time and to avoid formal administrative appeals and/or long-term litigation. The program, which was in pilot testing for small businesses for the past several years, closely models one that has been long available to larger businesses with more than $10 million in assets.
The FTS program intends for those businesses with at least one unresolved factual or legal issue from at least one open year under examination to work together with the IRS’s SB/SE division and Office of Appeals to resolve the matter at the earliest possible stage in the examination process. In fact, according to the IRS, audit issues can usually be resolved within 60 days, rather than months or years.
Under Rev. Proc. 2017-25, which became effective March 20, 2017, either the taxpayer, the SB/SE examiner or the IRS group manager may suggest participation in SB/SE FTS once issues are fully developed. The IRS and the taxpayer must consent to participate and must complete Form 14017, Application for Fast Track Settlement, which includes properly documented work papers supporting the examiner’s position and the taxpayer’s response. Thus, a good relationship with the IRS auditor will go a long way toward accommodation with the FTS program.
This development is important for small businesses with eligible activities that qualify for valuable research and development (R&D) tax credits. FTS is another procedural option for achieving a desired resolution in an examination situation. There are certain situations for which FTS does not apply, so it is recommended that business owners work with experienced tax professionals to take advantage of this program.
Tax Point Advisors assists CPAs and their clients in identifying and capturing their maximum federal R&D tax credits, as well as state R&D tax credits. For more information, contact us at (800) 260-4138, or please leave us a message below.
