Yes, the Fast Track Settlement (FTS) Issue Resolution Tool can be used in the Compliance Assurance Process (CAP). FTS is available as an issue resolution tool during both the pre-filing and post-filing stages of CAP on an issue-by-issue basis. If the tax treatment of an issue remains unagreed between the parties after 90 days from the date of full disclosure (or a different period if an extension is approved), an application to FTS may be made. If the IRS offers FTS, the taxpayer must agree to participate, and both parties will make a good faith attempt to resolve the disagreement. If an issue remains unagreed after FTS, the taxpayer and IRS may use other applicable issue resolution processes, such as a submission to Appeals. However, once the taxpayer elects FTS in pre-filing, it cannot be used for the same issue during post-filing.
The FTS process in CAP involves the following steps and considerations:
- Initiation: The Account Coordinator (AC) prepares the application package and forwards it to the Team Manager for approval. The Team Manager reviews, approves, signs the application, obtains the taxpayer's signature, and forwards it to the LB&I and Appeals Fast Track Settlement Program Managers.
- Participation: The Team Manager and appropriate team personnel, including specialists, their managers, and Technical Advisors from LB&I, participate in the Fast Track Settlement process with taxpayers, which includes attending meetings, discussions, and providing necessary information to achieve a comprehensive understanding of the issue.
- Resolution: If an issue is resolved during Fast Track Settlement, the agreed resolution is incorporated into the applicable closing agreement. Fully developed but unagreed issues not resolved using Fast Track Settlement during pre-filing are incorporated into a 30-day letter once the return is filed and the case is forwarded through the traditional Appeals process.
- Binding Arbitration: Binding arbitration is not an option available for CAP issues.
- Post-Filing Option: For LB&I taxpayers participating in CAP who do not utilize FTS prior to the return being filed, the option is available to elect FTS during the post-filing examination process. An exception is a change in facts and circumstances that the parties subsequently agree merits the use of FTS.
- Closing Agreements: Upon completion of the Fast Track Settlement in a CAP case, the FTS Appeals Official prepares a Fast Track Settlement Session Report, to be signed by the parties. If an issue is settled during Fast Track Settlement, the agreed settlement is documented in Form 14000, Fast Track Session Report, and the applicable Form 906, Closing Agreement on Final Determination Covering Specific Matters, is prepared by Appeals.
- Joint Committee Cases: Where a Joint Committee report is required for a CAP case, Appeals delays execution of the closing agreement until LB&I completes the Joint Committee procedures. LB&I is responsible for preparing the Joint Committee report.
In summary, FTS is a viable and structured option within the CAP to resolve tax disputes efficiently, leveraging mediation and settlement authority to facilitate agreements between the IRS and taxpayers.
Sources:
Rev. Proc. 2003-40
IRM Part 4. Examining Process. Chapter 51. LB&I Case Management. Section 2. LB&I Administrative Guidance
IRM Part 8. Appeals. Chapter 26. Alternative Dispute Resolution (ADR) Program. Section 1. Fast Track Settlement for Large Business and International (LB&I) Taxpayers
IRM Part 8. Appeals. Chapter 26. Alternative Dispute Resolution (ADR) Program. Section 8. Compliance Assurance Process - Fast Track Settlement
IRM Part 4. Examining Process. Chapter 51. LB&I Case Management. Section 4. LB&I/Appeals Fast Track Settlement Program (FTS)
Publication 4167 (04/2021)
