IRS Tax Controversy: IRS Creates Program to “Fast Track” Small Business Audits

The IRS is not known for its fast, efficient administration. In fact, many people consider the IRS to be a classic example of a bloated, incompetent bureaucracy. But that doesn’t mean that the agency isn’t trying. Recently, the IRS announced a new program designed to “streamline” the audit process for small businesses. Rather than dragging these cases out for months or even years, the new system will supposedly be able to resolve most issues within 60 days.

An announcement published by IRS.gov explains:

The Internal Revenue Service today announced the nationwide rollout of a streamlined program designed to enable small businesses under audit to more quickly settle their differences with the IRS.

The Fast Track Settlement (FTS) program is designed to help small businesses and self-employed individuals who are under examination by the Small Business/Self Employed (SB/SE) Division of the IRS. Modeled on a similar program long available to large and mid-size businesses (those with more than $10 million in assets), FTS uses alternative dispute resolution techniques to help taxpayers save time and avoid a formal administrative appeal or lengthy litigation. As a result, audit issues can usually be resolved within 60 days, rather than months or years. Plus, taxpayers choosing this option lose none of their rights because they still have the right to appeal even if the FTS process is unsuccessful. 

Jointly administered by SB/SE and the IRS Appeals office, FTS is designed to expedite case resolution. Under FTS, taxpayers under examination with issues in dispute work directly with IRS representatives from SB/SE’s Examination Division and Appeals to resolve those issues, with the Appeals representative typically serving as mediator.

The taxpayer or the IRS examination representative may initiate Fast Track for eligible cases, usually before a 30-day letter is issued. The goal is to complete cases within 60 days of acceptance of the application in Appeals.

It’s great to see the IRS taking steps to serve taxpayers better.

However, before getting too excited about this program, it’s worth asking whether it will lead to better results for business owners—or simply faster results. And if the new system encourages taxpayers to take on the IRS by themselves, without experienced, professional representation, business owners are likely to find themselves on the wrong end of many judgments.

It bears repeating that it is almost always a bad idea to take on the IRS by yourself. Even programs like this “Fast Track Settlement” program can be a nightmare for a taxpayer to navigate. Today’s tax code is simply too complex and the IRS has become too aggressive, for taxpayers to go up against the IRS without the help of an attorney.

The IRS doesn’t hesitate to use intimidation and aggressive collection efforts in order to get their way—but a tax attorney can force the agency to “play by the rules” and can deal directly with the IRS so that you don’t have to.

If you’d like to learn more, or if you have a tax dispute that you’d like our help resolving, please don’t hesitate to contact us today!