IRS institutes fast track audit dispute resolution for self-employed

On November 6, 2013, the I.R.S. announced the launch of a new Fast Track Settlement program aimed at allowing those who are self-employed and small business owners to shorten the time it takes to resolve disputes stemming from I.R.S. audits. People should be aware of the new FTS option and how to go about applying for such a settlement.

Speeding audit dispute arbitration

The new FTS program for those who are self-employed and small businesses is modeled on the program that has been available for several years to businesses with assets exceeding $10 million. The program allows small businesses and the self-employed to potentially cut the time it takes to resolve I.R.S. audit disputes to as few as 60 days by allowing people to dispute I.R.S. audit findings in arbitration during the auditing process. In the past, people needed to wait until the end of the audit to file a dispute, meaning that the process could take several months or even years.

The I.R.S. launched a pilot of the FTS program in 2006, and then broadened it in 2008. The newest expansion allowing those who are self-employed and small businesses to take advantage of the FTS option is a streamlined version of the earlier FTS programs, according to I.R.S. officials.

Applying for a Fast Track Settlement

People may apply to the FTS program by filing a Form 14017, along with a brief summary of the filer's position regarding the I.R.S's findings about the income tax return under audit. The I.R.S. then refers the matter to an I.R.S. appeals officer who acts as a "neutral party" during the arbitration process. I.R.S. officials caution that using the FTS program does not guarantee a positive outcome for those who dispute audit results. However, officials noted that those who take advantage of the FTS process do not lose their right to appeal findings if arbitration is unsuccessful.

Speak with an attorney

The I.R.S. is cracking down on those it believes are cheating on their taxes. The agency particularly targets small business owners and high income individuals for audits. Those who are facing I.R.S. audits should not try to go through it alone. It is important to have the assistance of a skilled attorney with a history of successfully resolving audit disputes in favor of the taxpayer to help navigate the process. If you have questions about a tax audit, talk to an experienced tax audit attorney who can advise you about your specific situation.