part4-289
- 4.51.4.1
Introduction to FTS Program - 4.51.4.2
Overview of FTS Program - 4.51.4.3
Case Eligibility and Exclusions - 4.51.4.4
General Procedures - 4.51.4.5
Introduction to the Fast Track Session - 4.51.4.6
Fast Track Settlement and Joint Committee Cases - 4.51.4.7
Post Fast Track Settlement Process – LMSB Case Procedures - Exhibit 4.51.4-1
LMSB Fast Track Settlement Application Issue Statement - Exhibit 4.51.4-2
Application for Fast Track Settlement - Exhibit 4.51.4-3
Fast Track Session Report - Exhibit 4.51.4-4
Territory Manager Concurrence Memo.
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A primary objective of the Service is to resolve tax differences at
the lowest level without sacrificing the quality and integrity of those determinations. -
Fast Track Settlement was developed as an alternative dispute resolution
process to further the Services goal of resolving tax controversies on a
basis that is fair and impartial to both the government and the taxpayer. -
FTS will improve business practices by addressing Service and taxpayer
disputes as early as possible to reduce burden for both parties. -
The LMSB, PQA Fast Track web page
http://lmsb.irs.gov/hq/pqa/Post-filing/pfa_fast_track_home.asp contains
many tools and links designed to help LMSB personnel during consideration
and participation in the process.
-
Revenue Procedure 2003–40,2003–1 C.B.1044
, formally established the FTS Program, with the goal of expediting
case resolutions and expanding the range of dispute resolution options available
to taxpayers. -
LMSB and the Office of Appeals jointly manage and administer the FTS
Program. -
FTS provides LMSB and taxpayers an opportunity to resolve their disputes
with an Appeals Official providing mediation skills and settlement authority.
-
Fast Track Settlement will enable taxpayers and the IRS to work together
to resolve outstanding issues while the case remains in LMSB jurisdiction. -
FTS program is designed to:
-
Increase issue resolution at the lowest level
-
Use Appeals tools in LMSB
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Decrease overall time from return filing to ultimate resolution
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Ensure process meets the needs of the LMSB population
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Reduce burden for the taxpayer and the Service
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FTS takes place while the case is in LMSB jurisdiction and is designed
to be completed in approximately 120 days. -
All three parties (LMSB, the taxpayer, & Appeals) are active participants
in the process, and all three must agree before a proposed resolution can
be implemented. -
FTS uses mediation techniques to focus issues and lead LMSB and the
taxpayer to self-determine the outcome of the dispute. -
When a resolution can not be reached through mediation, Appeals may
propose a resolution, but such proposal can not be imposed on either party.
-
While settlement authority is available in the process when needed,
factual issues can usually be resolved within LMSBs existing resolution authority
through mediation, without requiring settlement authority. -
For those issues not requiring settlement authority, Appeals will work
to resolve the issue via a mediated agreement between the taxpayer and LMSB.
For these issues, Appeals will generally not draft or execute a closing agreement. -
Issues involving legal interpretations generally require the consideration
of the hazards of litigation. For these issues, Appeals will first work to
mediate an agreement that falls within an acceptable range as determined by
an analysis of the litigating hazards. -
Once an acceptable agreement has been reached, Appeals exercises delegated
settlement authority to accept the settlement in a closing agreement that
finally determines the treatment of the issues. Appeals will not execute a
settlement agreement that does not fall within an acceptable range. -
For issues requiring settlement authority, Appeals will analyze the
hazards of litigation in the same manner as would be done in the traditional
Appeals process.
-
FTS may be initiated at any time after an issue has been fully developed.
-
“Fully developed”
will generally be indicated by:-
the issuance of a Notice of Proposed Adjustment (Form 5701) to the taxpayer
clearly setting out the Governments position, -
a written responses from the taxpayer clearly defining their position
and the basis for disagreement, and
-
-
With the concurrence of the Appeals FTS Program Manager and the LMSB
Territory Manager, an issue may be accepted when it is adequately developed
to facilitate resolution, even though it may not be developed to the extent
required for a Revenue Agent Report (RAR). -
When considering the use of FTS, it is recommended that the LMSB Team
Manager contact his/her Territory Manager and/or the FTS Program Managers
to discuss the case/issues. When the Team Manager considers it appropriate,
and if requested, such discussions may include the taxpayer via conference
call. -
Application procedures are discussed at IRM Section 4.51.4.4.3.
-
The Issue Management System (IMS) is the primary LMSB tracking tool
for FTS, and it is important to accurately and timely complete appropriate
FTS fields in the IMS system. -
The following fields have been established within IMS to track and monitor
the FTS program in LMSB:-
“Fast Track Settlement”
– A ”
Yes”
in this field indicates that FTS was used. -
“Fast Track Settlement Offered”
– A ”
Yes”
in this field indicates that FTS was offered, but declined by the
taxpayer. -
“Fast Track Settlement Start Date”
– Date that FTS
is initiated (application submitted and accepted). -
“Fast Track Settlement End Date”
– Date FTS
process is completed either with a signed agreement or by conclusion that
agreement can not be reached. -
“Fast Track Settlement Amount Per Retn”
– Amount
claimed on the return relative to the FTS issue. -
“Fast Track Settlement Amt Per Exam”
– Adjustment
amount proposed relative to the FTS issue. -
“Amount Per Fast Track Settlement”
– Adjustment
amount agreed to through the FTS process.
-
-
At a minimum, FTS data on IMS should be updated when the FTS process
is initiated and when it is completed. -
IMS fields relevant to FTS may be modified, or new fields added as experience
is gained with IMS and its reporting capabilities. Personnel inputting FTS
data on IMS should be alert to such changes.
-
While most LMSB cases/issues can be successfully worked using FTS, some
cases/issues are not eligible for, or are not appropriate for the process.
LMSB Team Managers and Territory Managers, plus the Appeals FTS Program Managers
will determine eligibility and appropriateness utilizing the following criteria.
-
The LMSB Team Manager and the taxpayer will evaluate their individual
circumstances to determine if this process meets their needs to bring the
case to conclusion within the agreed upon time frames. -
Fast Track Settlement may not be the appropriate dispute resolution
process for all cases. -
The LMSB Team Manager and taxpayer should discuss other dispute resolution
opportunities if a case is determined not to be eligible or appropriate for
FTS. -
The greatest opportunity to reduce administrative burden and costs for
all parties exist in cases where:-
All issues are raised and the examination process is nearly complete.
-
All claims are filed and examined.
-
Issues are fully developed.
-
Taxpayer has stated their position in writing.
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Unagreed issues are limited in number.
-
-
FTS process works best in cases where all unagreed issues are included
in the application, however:-
Individual unagreed issues or groups of issues will be accepted for FTS
in cases where it is determined to be in the best interest of tax administration. -
Acceptance of individual issues may be limited due to availability of
Appeals resources.
-
-
When FTS is unsuccessful in resolving all issues, the taxpayer will
be offered the opportunity to pursue resolution through traditional Appeals. -
If the traditional Appeals process is pursued, Appeals management will
take appropriate action to fulfill the Appeals policy to be fair and impartial.
This may, but does not require the assignment of new Appeals personnel. This
policy should be made clear to the taxpayer at the beginning of the process,
and if the taxpayer is unable to accept this policy, the taxpayer may decide
to forego the Fast Track option and go to traditional Appeals.
-
Generally cases worked under the jurisdiction of LMSB are eligible for
FTS. -
Cases with specialized issue characteristics including the following
may be eligible for FTS with some restrictions:-
Coordinated Issues
-
Industry Specialization Issues.
-
Listed transaction issues.
-
-
Under limited circumstances, cases with specialized procedural characteristics
may be accepted for FTS with approval of the Appeals FTS Program Managers
and LMSB Territory Manager and with special handling procedures. These cases
include:-
Cases involving taxpayers in bankruptcy where LMSB follows the provisions
of IRM 4.27, Bankruptcy – Examiners Responsibilities
, regarding notification to Chief Counsel and Department of Justice.
Since the final tax determination is under the jurisdiction of a court, a
closing agreement will generally not be used. The decision to reduce the liability
in the proof of claim rests with LMSB, in accordance with Chief Counsel and
Department of Justice. -
Cases involving Tax Equity & Fiscal Responsibility Act of 1982 (TEFRA)
procedures where the first level entity and the major controlling shareholder/partners
are included in the Fast Track Session. LMSB will complete the required TEFRA
administrative proceedings, including Notice of Proposed Adjustment (NOPA),
Notice of Beginning Administrative Proceedings (NBAP), and Notice of Final
Partnership Administrative Adjustment (FPAA) procedures for all levels, including
investor statutes. Appeals will provide an Appeals Official to conduct the
Fast Track Session at the first entity level and help the parties reach a
settlement. A Waiver on Assessment Form 870P-AD type of agreement will be
used to secure agreement from the entity and controlling shareholders/partners.
Closing agreements are not normally used in TEFRA cases, but may be used at
the option of the parties. -
Joint Committee cases, utilizing procedures under Section 4.51.4.6 and
IRM 4.36 .
-
-
Non-LMSB Cases
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Cases outside of LMSB jurisdiction may be accepted for the FTS process
with the concurrence of the Appeals FTS Program Manager and the approval of
the referring Operating Divisionss first line management. -
An SB/SE case involving significant issues with broad impact and requiring
settlement authority would be an example of Non-LMSB case that may be eligible
for FTS. (e.g. – an SB/SE Examination Specialization and Abusive Schemes case). -
For Non-LMSB cases accepted into the FTS program, the appropriate compliance
first line manager responsible for the case will carry out the responsibilities
of the LMSB Team Manager under FTS procedures. -
For Non-LMSB cases accepted into the FTS program, the affected Non-LMSB
Operating Division will carry out the responsibilities of the LMSB Operating
Division under FTS procedures.
-
-
The following cases/issues are generally not appropriate for the Fast
Track Settlement Program:-
Issues docketed before any court for the taxpayer requesting FTS.
-
Cases for which a 30-Day Letter has been issued.
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Issues challenging the constitutionality of tax laws.
-
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Certain issues will be excluded from FTS as follows:
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Issues in a taxpayers case designated for litigation.
-
Issues in a taxpayers case under consideration for designation for litigation.
-
Issues for which the taxpayer has filed a request for competent authority
assistance. -
Issues for which the taxpayer has requested the simultaneous Appeal/Competent
Authority procedure described in section 8 of Rev.
Proc. 2002-52 , 2001-31 IRB
242. -
Issues/cases outside LMSB jurisdiction except as noted in IRM 4.51.4.3.2.
above. -
Issues that are part of a whipsaw transaction.
-
Issues for which mediation would not be consistent with sound tax administration.
-
Issues that have been identified in a Chief Counsel Notice, or equivalent
publication, as excluded from the FTS process.
-
-
Issues specifically excluded under (2) above will result in the exclusion
of the entire case. -
Issues for which the Service is in the process of establishing a uniform
settlement position (e.g. – certain listed transactions) may be excluded from
FTS.
-
LMSB and Appeals have established joint operating procedures for the
case application, submissions, screening and resolution processes. -
Joint LMSB/Appeals procedures are covered by this IRM subsection.
-
Additional procedures applicable only to the Appeals function for FTS
cases may be found in IRM Part 8.
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Fast Track Settlement is premised on the basis that the LMSB Team Manager
and taxpayer have exhausted existing issue resolution strategies available
within LMSB. -
Fast Track Settlement is an alternative dispute resolution (ADR) initiative
which must be considered by the LMSB Team Manager when there are unagreed
issues which can not be resolved between the taxpayer and the examination
team alone. Such consideration, and conclusion reached, will be documented
in the case activity record and/or case binder. -
Consideration of FTS for unagreed issues will be documented during the
risk analysis process, using Form 13744. Consideration may also be documented
on the case activity record. -
The taxpayer should be provided with a copy of the Fast Track Settlement
Publication #4539 at the opening conference. -
At a minimum, the potential use of Fast Track should be discussed at
the following points in the examination process:-
Examination opening conference
-
Mid-cycle case review
-
When potentially unagreed issues are proposed (Form 5701 has been revised
to include an FTS reminder.)
-
-
To ensure that the taxpayer has a basic understanding of the FTS process,
the LMSB team should ensure that the taxpayer is familiar with Rev. Proc. 2003-40 and if need be, provide
a copy of the Rev. Proc. prior to considering an application. -
Participation in Fast Track Settlement does not preclude the taxpayer
from requesting traditional Appeals consideration if the FTS process is not
successful in resolving the case.
-
The LMSB Team Manager will explain the Fast Track Settlement process
to the taxpayer and determine whether the case qualifies for Fast Track Settlement
using the case eligibility and exclusion criteria of IRM Section 4.51.4.3
. -
When deciding if the issue is adequately developed, it is recommended
that the Team Manager discuss the development of the proposed adjustment with
the appropriate LMSB Technical Advisor (T/A) when the issue falls within the
purview of the T/A. -
The LMSB and Appeals Program Managers will be available to assist the
parties to determine whether the case is suited for the FTS process -
If the case does not qualify for FTS, the standard examination procedures
and closing process are to be followed. -
Any request for FTS denied to the taxpayer by the LMSB Team Manager,
requires concurrence of the LMSB Territory Manager. -
In all cases, the Team Manager will forward a copy of any denied request,
along with a brief statement as to the reasons for denial, to the LMSB Territory
Manager. A pro forma memo requesting Territory Manager concurrence with Fast
Track denial is contained at Exhibit 4.51.4-4.. A completed copy of this memo
will be maintained in the case file.
-
The FTS application is submitted by the LMSB Team Manager simultaneously
to his/her Territory Manager and the Appeals FTS Program Manager with an information
copy to the LMSB FTS Coordinator. -
The Appeals FTS Program Manager, in coordination with the LMSB Territory
Manager, and advice of the LMSB FTS Program Manager as needed, will screen
the applications to insure the case is appropriate for FTS. -
Acceptance or rejection of an FTS application will be based on a review
of information submitted, discussions with the LMSB Team Manager, and the
recommendation of the assigned Appeals Team Manager. -
The Appeals Program Manager will determine availability of Appeals staffing
resources before accepting the case. -
If accepted, the LMSB Team Manager and the taxpayer will be contacted
by the assigned Appeals Officer within ten days of receipt of the application. -
If a decision is made not to accept a case into the FTS Program, the
LMSB Territory Manager and Appeals FTS Program Managers will jointly notify
the LMSB Team manager and the taxpayer within ten days of receipt of the application.
-
This section discusses the general procedures to be followed by LMSB
personnel to initiate the application and acceptance process for FTS cases.
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LMSB team is fully involved in the Fast Track Settlement process as
an equal participant. -
LMSB participants will include the Team Manager (the LMSB decision maker)
and others who have acknowledge and expertise which may contribute to issue
resolution. -
In addition to the Team Manager, participants will generally include
the Team Coordinator and/or Revenue Agents primarily responsible for the development
of the subject issue(s). -
LMSB participants may also include specialists and/or Technical Advisors.
In those instances where the issues are industry specific or there has been
a Technical Advisory position established for the issue, the participation
of appropriate Technical Advisors is strongly recommended. -
The LMSB Team Manager, in consultation with the Appeals Team Case Leader,
will determine the LMSB participants.
-
When issues are identified as potentially appropriate for FTS settlement
by either the taxpayer or the examination team, the LMSB Team Manager will
discuss the issues and case with the taxpayer. Discussions should include:-
Suitability of issues for the FTS process,
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Willingness of both parties to consider alternative resolution options
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Adequacy of issue development, and
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Ability of both parties to devote resources to the process.
-
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The LMSB Team Manager is encouraged to phone the LMSB Territory Manager,
the LMSB Program Manager and/or the Appeals FTS Program Manager to discuss
the case and/or issues before the Fast Track Settlement Package is completed. -
The LMSB Team Manager and the taxpayer will identify a preferred conference
site, and Appeals will make every attempt to hold the Fast Track Session conference
at the preferred site, but may not in all cases be able to honor the taxpayer/LMSB
request. -
Upon reaching agreement to participate in the Fast Track Settlement
process, both the taxpayer and LMSB Team Manager will jointly complete and
sign the “Application for Fast Track Settlement.”
See Exhibit 4.51.4-2.. -
The LMSB Team Manager shall call the Appeals Program Manager for the
location of the servicing Appeals Office. -
The application package (“Application for Fast Track Settlement,
”
Form 5701, and taxpayers written responses) will be forwarded to the
servicing LMSB Appeals Office within three business days of obtaining the
taxpayers signature. -
Jurisdiction, including statute of limitation responsibility, remains
with LMSB; therefore, the case file will not be forwarded to Appeals.
-
Prior to the submission of the full application package described above,
the LMSB Team Manager will make the following submissions.-
The LMSB Team Manager will fax a copy of the “Application
for Fast Track Settlement”
to both the LMSB Territory Manager and the
Appeals FTS Program Manager. -
The LMSB Team Manager will include with the faxed application the “LMSB Fast Track Settlement Application Issue Statement”
(IRM
Exhibit 4.51.4–1) for each issue being referred. -
The Issue Statement will contain a descriptive name of the issue being
referred, the UIL number, dollar amounts by year, and a brief statement of
basis for the proposed adjustment and the taxpayers basis for disagreement. -
An information copy of the “Application for Fast Track Settlement
”
and the “LMSB Fast Track Settlement Application Issue
Statement”
will be faxed to the LMSB FTS Program Coordinator.
-
-
This section discusses the general procedures to be followed by Appeals
personnel regarding the application, acceptance and case assignment process
for the FTS Program. -
Further specific Appeals procedures are contained at IRM Part 8.
-
Appeals functions in a mediation role to guide LMSB and the taxpayers
to a mutually acceptable resolution. -
Appeals plays an active role in the issue resolution process.
-
When appropriate, Appeals may advocate a resolution position, but can
not impose such position on either party. -
When appropriate, Appeals will utilize delegated settlement authority
to implement an agreed upon resolution. -
Fast Track Settlement cases are assigned to Appeals Officers, as listed
below:-
Primarily assigned to a Grade 15 Appeals Team Case Leader (ATCL) trained
in mediation. -
In limited cases, assigned to Grade 14 Appeals Officers, trained in mediation,
working in conjunction with Appeals Team Manager
-
-
The Appeals FTS team may include Appeals Technical Guidance Coordinators
(TGC) for CCI & ACI issues when appropriate. -
Other Appeals Officers will be assigned to the team as needed, and at
the discretion of the ATCL/ATM. -
Appeals may utilized mediation trained individuals from other divisions
as co-mediators when their specific insight and technical knowledge of the
issue being considered would make such participation beneficial to resolution
of the issue.
-
When the application is ready for submission, the LMSB Team Manager
will call the Appeals FTS Program Manager, who will provide direction as to
the Appeals office to which to send the full application package. -
In most cases, the Appeals FTS Program Manager will alert the ATM that
a Fast Track Settlement case is being sent to the local office. When time
permits, the ATM and Appeals FTS Program Manager will preassign an Appeals
Official to the case. -
Within three business days of receipt, the ATM will review the application
to determine if the FTS eligibility requirements are met. The ATM may involve
an ATCL or other Appeals Official in the review. -
If the ATM determines the case is eligible, the ATM must contact the
Appeals FTS Program Manager to discuss acceptance of the case. -
ATM will recommend that the FTS Program Mangers accept the case by signing
the application form. The Appeals FTS Program Manager and the LMSB Territory
Manger will decide whether to accept the application after considering the
ATMs recommendation and other factors. -
If the ATM/ATCL does not recommend acceptance of the case, this will
be communicated to the Appeals FTS Program Manager, who may assign the application
to another ATCL for a second review. -
Any case started without the approval of the both Appeals FTS Program
Manager and the LMSB Territory Manager will, at the discretion of the respective
Managers, be treated as a withdrawn case. -
Except with the concurrence of the LMSB Territory Manager and the Appeals
FTS Program Managers, the FTS process is limited to 120-days. The start date
for the 120-day Fast Track process is the date the Appeals Official is assigned
to the case.
-
It is anticipated that the issues are fully developed and that requests
for Technical Advice, Field Service Advice, etc. will not be made during the
FTS process. Cases requiring further issue development action are not ready
for FTS, and the ATM will recommend rejection accordingly. -
If the ATM determines that the case does not qualify for FTS (e.g. issues
not fully developed, issues do not qualify, Appeals resources are not available,
issues excluded), the ATM will discuss the rationale for the denial with the
Appeals FTS Program Manager. -
Appeals FTS Program Manager may concur with the recommended denial of
the FTS request, or may accept the case and identify necessary resources. -
If the FTS request is recommended for rejection, the Appeals FTS Program
Manager will discuss the rationale for rejection with the LMSB Territory Manager
and the LMSB FTS Program Manager. -
The Program Managers will discuss the rationale for the denial with
the taxpayer and LMSB Team Manager within ten business days of receipt of
the application.
-
If a local Appeals office receives a Fast Track Settlement application
directly from the LMSB Team Manager, rather than through established channels,
Appeals Records will immediately fax a copy of the Application for FTS to
the Appeals FTS Program Manager, and contact the ATM servicing the local office. -
The ATM must contact the Appeals FTS Program Manager to discuss acceptance
of the case into FTS. If Appeals Records did not complete the fax action,
the ATM will fax a copy of the Application for FTS to the Appeals FTS Program
Manager.
-
After the Application for Fast Track Settlement is accepted by the LMSB
Territory Manager and Appeals FTS Program Managers, the ATM will assign an
Appeals Officer or an Appeals Team Case Leader within seven business days
of receipt of the application. -
Appeals will normally accommodate the site jointly requested by the
LMSB Team Manager and the taxpayer. -
Where travel or personnel resource limitations impose restrictions on
Appeals ability to accommodate the requested site, approval of the Appeals
FTS Program Manager is required to use an alternative site. -
The ATM and ATCL shall coordinate the need to use a team of Appeals
Officers. -
Where the case includes Appeals Specialty Issues, the Appeals Officer
or ATCL will follow IRM requirements to refer the issues to the Appeals Director
Technical Guidance staff. Such referral shall be initiated by phone and followed
up with a formal written referral. The Appeals Technical Guidance Coordinator
(TGC) may be assigned if warranted. -
Request may be made to Appeals Management for specific assignment of
Appeals officers with experience or particular technical expertise involving
the issue, such as CCI/ACI issues, international issues or listed transactions.
-
Within ten business days after the case is assigned, the Appeals Official
will call the taxpayer and LMSB Team Manager to start the Fast Track Session
planning process. -
The Appeals Official may identify and discuss the need to limit the
number of participants to the Fast Track Session. -
Fast Track cases are excluded from the Settlement Authority Panel Review
because LMSB must agree to any disposition of the issues.
-
Where an issue is coordinated as either a CCI or ACI issue, the Appeals
Team shall follow the procedures in IRM Section 8.7.3.6. -
To meet the two pronged requirement that all decision makers are present
at the Fast Track Session and that Coordinated CCI/ACI issues are subject
to the review & concurrence of the Appeals Coordinator, the Appeals Coordinator
will normally serve as a team member and will participate in the Fast Track
Session with the taxpayer and LMSB. -
If the TGC is not part of the Fast Track Appeals Team, settlement of
the CCI/ACI issue remains subject to the review & concurrence of the TGC.
This may be accomplished via telephone discussion. -
If there is a disagreement between the TGC and the appeals officer on
appropriate settlement terms for the issue, the resolution procedures in IRM
Section 8.7.3.6.2. will be followed.
-
The LMSB Team Manager will :
-
Determine the composition of the LMSB Fast Track team.
-
Serve as LMSBs decision maker for all issues under FTS consideration.
However, at the discretion of LMSB, decision making authority may be assumed
by a higher level LMSB management official who participates in the session. -
Attend all FTS session meetings and consider information and arguments
presented by issue specialists for all parties.
-
-
LMSB specialists, specialist managers, technical advisors, and revenue
agents selected by the Team Manager to be part of the LMSB team will:-
Be the primary presenters of LMSBs position and technical arguments for
issues under consideration. -
When appropriate, provide rebuttals to arguments raised by the taxpayer.
-
Provide consultation and advice to the LMSB decision maker regarding proposed
settlements.
-
-
When LMSB Counsel representatives are part of the LMSB Fast Track team,
they will be active participants. Counsels primary role will be to provide
advice to LMSB as to legal interpretations and appropriateness of proposed
settlements. In addition, at the discretion of the LMSB Team Manager, Counsel
may participate in the presentation of the LMSB position and technical arguments
for the issues under consideration.
-
The Fast Track Session consists of all the activities occurring over
the period of time from the date the case is accepted thought the face-to-face
session involving all three parties.
-
Planning begins when the taxpayer and LMSB complete the Application
for Fast Track Settlement form, which includes a target completion date. -
The parties are encouraged to bring their best experts into the Fast
Track Settlement process. It is required that the “decision
makers”
be present. -
Appeals will lead the taxpayer and LMSB to develop an overall plan for
the Fast Track Session. The plan will include the preparation of an agenda
and Fast Track Session Report (IRM Section 4.51.4.5.3.5). -
The parties must agree upon a plan to complete the Fast Track Session
within 120-days.
-
In conducting the Fast Track Session, the Appeals Official will use
a Fast Track Session Report (IRM Exhibit 4.51.4–3) and an Agenda. The
Agenda will guide the following:-
Communication,
-
Setting the order of issue discussion,
-
Ask reflective questions to clarify the issues; and
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Conference meetings.
-
-
The Appeals Official will provide the Fast Track Session Report and
Agenda to all decision makers early the process, and will update them as the
session progresses.
-
The Fast Track Session will be lead by Appeals, but all three parties
will be active participants with equal voices. -
FTS employs various alternative dispute resolution techniques to propose
solutions. -
Appeals does not perform in a traditional Appeals role, but will first
use an interest-based approach to facilitate a settlement of the issues between
the parties. -
Using mediating techniques, Appeals will attempt to bring the parties
to a mutual resolution of the issues during the Fast Track Session. -
As issues are resolved, Appeals will post the results to the Fast Track
Session Report and give an updated copy to all participants. Appeals will
maintain a history of the updated Fast Track Session Report. -
The Fast Track Session may include both combined meetings with LMSB,
taxpayer and Appeals together, and separate meetings (LMSB-Appeals, and taxpayer-Appeals)
as appropriate.
-
Appeals may use various methods and techniques to meet the needs and
circumstances of each particular case. -
The Appeals Official may ultimately make recommendations regarding the
settlement of any or all issues (both factual and legal). If acceptable to
all parties, the settlement proposal may be adopted. -
Neither party is compelled to accept a settlement proposal made by the
Appeals Official. -
In order to implement an Appeals settlement proposal both LMSB and
the taxpayer must agree. If the taxpayer and Appeals agree upon a settlement
proposal, but the LMSB Team Manager rejects the proposal, the settlement rejection
will be referred to the LMSB Territory Manager for review. -
If the LMSB Territory Manager concurs with the proposed settlement rejection,
such rejection must be expressed in writing by the Territory Manager. If an
acceptable alternative settlement can not be reached, the issue will be closed
unagreed. If the Territory Manager does not concur in rejecting the Appeals
settlement proposal, the proposal will be accepted by LMSB.
-
The prohibition on ex parte communications between Appeals Officers
and other Internal Revenue Service employees provided by section 1001(a)(4)
of the Internal Revenue Service Restructuring and Reform Act of 1998 does
not apply to the communications arising in Fast Track Settlement, because
the Appeals personnel are not acting in their traditional appeals settlement
role. -
If the Fast Track Settlement process is unsuccessful, Appeals may not
issue a statutory notice, the taxpayer retains the traditional appeals rights,
and the process occurs under LMSB jurisdiction.
-
If the taxpayer or LMSB presents new information during the Fast Track
Session that the opposing party has not considered, Appeals will give the
receiving party adequate time to evaluate the information/documentation. -
Where consideration of substantial new information will unacceptably
delay the Fast Track Session, the case may be withdrawn from FTS by Appeals,
LMSB or the taxpayer. Such a case may be reaccepted for FTS after the issues
are fully developed. -
In situations where substantial new information is disclosed as part
of the FTS process, it may serve as a basis to raise a new issue or file a
claim. Where the process will not be delayed beyond 120-days, and all parties
agree to accept the new issue or claim, it may be accepted into the existing
FTS process, subject to limitations discussed under Section 4.51.4.5.3.4.
-
Experience proves that lapse time is doubled when new issues or claims
are brought into Fast Track Settlement after the process is started. For this
reason, new issues or claims will generally not be accepted as part of the
FTS process. -
The grounds for raising a new issue or claim must be substantial, and
the potential effect on the tax liability must be material. New issues or
claims should not be raised to trade against existing issues. -
A taxpayers claim requires LMSB examination action. However, such action
need not be part of the FTS process. -
New, unrelated claims or new issues should not be attached to an existing
FTS process, but should generally be considered in a separate process outside
of FTS. -
The parties will work to resolve the issues originally referred to Fast
Track Settlement and the FTS process will not be suspended to allow examination
of the new claims/issues. -
If the taxpayer declines to bring the Fast Track process to a conclusion
prior to consideration of such claims, the Service may withdraw the case from
FTS. The taxpayer may then request further FTS consideration. -
Once a case comes to FTS, the taxpayer and Service should expect that
all the issues and claims have been raised, that all relevant information
has been disclosed, and that the case is ready for resolution. -
Addressing this challenge, and to prevent new issues arriving late in
the process, the Appeals Official shall confirm that all issues are listed
on the Fast Track Session Report at the beginning of the process.
-
The Fast Track Session Report (Exhibit 4.51.4-3), is an administrative
document that assists all parties in planning the Fast Track Session and reports
the progress on the issues in dispute. -
At the conclusion of the process, the Fast Track Session Report forms
the basis for drafting closing agreements and the Revenue Agents Report (RAR). -
The Fast Track Session Report is used to identify the issues and reflect
agreement from all parties as to the following:-
Number of issues;
-
Description of issues;
-
Amounts in dispute;
-
Conference dates; and ,
-
Plan of action to be followed in the Fast Track Session process.
-
-
In addition to documenting all contacts in the Appeals Centralized Data
System (ACDS) activity record and conference notes, the Appeals Official will
prepare the Fast Track Session Report (Session Report) at the start of the
Fast Track Process, and update the Session Report timely as decisions are
made. -
The Appeals Official will:
-
Give both taxpayer and LMSB a copy of the Session Report at the beginning
of the process, after each decision is reached and when the Session Report
is updated, -
Confirm that the parties agree with the entries on the Session Report,
and, -
Solicit the signatures of the taxpayer and LMSB Team Manager on the Session
Report at the conclusion of the session (agreed or unagreed).
-
-
The signing of the Fast Track Session Report does not constitute a final
settlement. The signature on the Fast Track Session Report carries no more
force and effect than a memorandum of understanding between the parties. -
The Fast Track Session Report is not a waiver of restrictions on assessment,
nor does it terminate consents to extend the statute of limitation, nor does
it start the running of any statute of limitations, i.e. – one-year statute
under section 6629(f) involving TEFRA proceedings. -
The signature of a Service Official on the Fast Track Session Report
does not create a promise against reopening the case.
-
The Fast Track Session Report Agreement shall be treated as final when
it is signed, unless the specific conditions outlined below warrant altering
the agreement.-
If an agreement is reached in a signed Fast Track Settlement Session Report,
but a subsequent authoritative decision is rendered that affects the agreement
in a substantive and material manner, either LMSB or Appeals may reconsider
the agreement unless both the taxpayer and Appeals previously signed a closing
agreement (Form 906 or 870-AD). -
If the change is substantive and material, the agreement should be renegotiated.
The word substantive shall mean that the change in law or legal precedent
results in a meaningful change to Appeals assessment of the hazards of litigation. -
Any agreement reached in a Fast Track Settlement Session may be reopened
in the case of fraud, malfeasance, concealment or misrepresentation of material
fact. -
The grounds for such action must be substantial (strong, possessing real
merit) and the potential effect on the tax liability is material (having real
importance and great consequence). -
NEW ISSUES – There must be some good, sound, substantial grounds already
existing in the record or known to the decision maker to raise the new issue. -
Substantial grounds are those that cause a decision maker to be quite
certain, at the time a new issue is raised, that the Government will prevail
if the issue is litigated. Quite certain does not necessarily mean 100 percent
certain, but it does mean a very high degree of certainty. -
Outside of these strict parameters, LMSB and Appeals shall respect the
settlement terms agreed to on the Fast Track Session Report.
-
-
Appeals commits to advocate the agreement reached in a signed Fast Track
Session Report to reviewing authorities, such as the Joint Committee on Taxation. -
In the event of a request to reconsider the Fast Track Session Report
agreement, the LMSB and Appeals FTS Program Managers must agree to reconsider
the agreement. In the event the two parties are unable to agree, the decision
shall be elevated to the Executive Owners of the Fast Track Settlement process.
-
If after a reasonable time, it is apparent that no further benefit may
be derived from the process, the LMSB Team Manager and/or the Appeals Officer/Appeals
Team Case Leader should consider terminating the session. -
If the Appeals Officer or an Appeals Team Case Leader (ATCL) decides
to terminate the Fast Track Session, concurrence of the Appeals FTS Program
Manager is required. -
If the LMSB Team Manager decides to terminate the Fast Track Session,
concurrence of the appropriate Territory Manager is required. -
The party terminating the Fast Track Session shall notify the other
parties by letter explaining the reason for termination and outlining the
taxpayers right to a traditional Appeals process. -
If no issues have been resolved prior to withdrawal, no further reporting
to the taxpayer or LMSB by Appeals will be required. -
If some issues have been resolved at the time of withdrawal, standard
FTS process closing procedures will be followed with regard to the resolved
issues. -
The taxpayer will retain all standard Appeals rights with regard to
any issues remaining unresolved at the time of withdrawal.
-
The taxpayer may withdraw from the FTS process at any time by notifying
the LMSB Team Manager and the Appeals representative in writing. -
For any issue(s) that remain unresolved, taxpayers will retain all of
the standard Appeals rights. -
LMSB will close the case as “Unagreed”
or ”
Partially Agreed”
as appropriate and forward to Appeals upon receipt
of an acceptable protest and request for an Appeals hearing from the taxpayer. -
The taxpayer should be advised that the case will be closed through
the standard LMSB closing process.
-
Appeals has settlement authority under Delegation Order 97.
-
An Appeals Official, such as an ATCL or Appeals Team Manager, uses delegated
settlement authority to approve and enter into any FTS Agreement that involves
hazards of litigation by using a Specific Matters Closing Agreement (Form
906) or a waiver Form 870-AD. -
Appeals makes its own evaluation of the hazards on Fast Track issues.
LMSB should not commit or appear to commit to a settlement that exceeds their
authority to resolve issues prior to referral to Fast Track Settlement. -
Potential settlement positions that may have been discussed with the
taxpayer before an FTS referral may be presented to the Appeals Official for
consideration during the Fast Track session. However, Appeals will do an independent
evaluation of the hazards and will not execute a settlement that does not
fall within such hazards evaluation or established settlement guidelines for
the issue. -
If the Appeals Official does not accept a settlement proposed between
the taxpayer and LMSB, the Official will explain in full to both parties why
it cannot be accepted. -
If a Joint Committee report is required for the case, Appeals will delay
execution of the closing agreement until LMSB completes the Joint Committee
procedures. Where Appeals settlement authority has been utilized on a Joint
Committee case, the Appeals Official involved in the settlement will be available
to respond to inquiries from the Joint Committee regarding the settlement.
-
When the issues are resolved, or a decision is made that a resolution
cannot be reached, the FTS case will be closed promptly. -
The Appeals Official will follow the FTS closing procedures carefully
so that both parties are notified of the outcome. -
The closing letter will be issued promptly by Appeals to both parties,
making certain to date the letter. -
If the case is unagreed an Appeals Case Memorandum (ACM) will not be
prepared, and the administrative file will be returned to LMSB without Appeals
notes prepared to evaluate the issue.
-
When an agreement is reached, a Fast Track Session Report will be completed
by Appeals, reflecting the agreement, and all parties will sign the Report. -
Where Appeals settlement authority has been utilized, Appeals will prepare
a closing agreement based on the signed Fast Track Session Report. -
When closing agreements have been used, the taxpayer will be asked to
sign the agreement, and Appeals will execute it on behalf of the Government.
In cases involving Joint Committee (JC) review, Appeals will close their FTS
work unit without signing the closing agreement, and with instructions for
LMSB to return the closing agreement to Appeals for execution of the agreement
after the JC review process is complete. -
At the conclusion of the FTS process, Appeals will provide the LMSB
team with the following:-
Form 5402 (Appeals Transmittal and Case Memo),
-
Appeals Case Memorandum (ACM) for settled issues,
-
Executed Closing Agreement if utilized (For JC cases, signed by the taxpayer
only, and to be signed by Appeals after JC review.), -
Completed Fast Track Session Report,
-
FTS workpapers prepared by Appeals, and
-
Settlement agreements for TEFRA signed by taxpayer (A list of investor
names, TINs, and one-year assessment dates will be shown on Form 3210 used
to transmit the package to LMSB).
-
-
Preparation of brief Appeals Case Memorandum (ACM)
-
Prepared for issues settled using Appeals settlement authority.
-
ACMs prepared for FTS cases will be a brief summary
of significant facts, body of law relied upon by the parties, and evaluation
and recommendation as to whether the disposition should be accepted. -
For JC cases, ACMs will be included in the JC Report in support of the
settlement reached. -
ACMs will not be prepared for issues resolved within LMSBs resolution
authority, or for unresolved issues.
-
-
At the completion of the FTS process, LMSB will proceed to complete
actions on the overall case. Resolved issues will be incorporated into the
RAR, and LMSB will proceed to complete actions on the overall case, as indicated
in IRM Section 4.51.4.7. -
The Appeals FTS participants will complete and submit internal Appeals
reporting requirements in accordance with IRM 8.1 (Appeals). -
A report on the FTS case results will be provided to the LMSB Territory
Manager and the LMSB FTS Program Manager by the Appeals FTS Program Manager.
The report to consist of Form 5402, ACM for settled issues, completed FTS
Session Report, and an ACDS summary printout.
-
When the Fast Track Settlement process is unsuccessful in resolving/settling
an issue (including withdrawn issues), at the time of closing the FTS case.
Appeals will send a letter to both the taxpayer and LMSB, stating who participated,
listing the issue that were not resolved, and explaining the taxpayers rights
to appeal. -
The administrative file consisting of the Form 5701 with the taxpayers
written response, FTS workpaper and Form 5402 will be provided to LMSB for
inclusion in the case file. No ACM will be prepared for unresolved issues. -
At the completion of the FTS process, LMSB will proceed to complete
actions on the overall case, as indicated at IRM 4.51.4.7.. -
The Appeals FTS participants will complete and submit internal Appeals
reporting requirements in accordance with IRM 8.6 . -
A report on the FTS case results will be provided to the LMSB Program
Manager by the Appeals Program Manager.
-
Special procedures must be followed in cases subject to Joint Committee
(JC) reporting requirements. General JC procedures under
IRM 4.36 apply to cases utilizing the Fast Process. In addition
to, and in conformity with the general JC procedures, the following apply
to FTS cases. -
The FTS Application form provides for the identification of potential
Joint Committee status. If the Joint Committee criteria are met, or will potentially
be met upon resolution, the Team Manager must so indicate on the FTS Application. -
Upon assignment of a Fast Track case, Appeals must confer with both
the taxpayer and LMSB to determine whether the case is subject to JC reporting
requirements, and record the results in the ACDS case activity record. -
At the completion of the Fast Track process, the case status relative
to JC reporting will be reconfirmed before finalizing the settlement, taking
into consideration the results of any issue resolutions reached. -
Appeals is responsible for preparing the ACM supporting the basis of
any issue settlements reached in Fast Track. Appeals will prepare an ACM that
explains ONLY the SETTLED FTS issues in sufficient detail and analysis to
apprise the JC of the Appeals evaluation and settlement of the Fast Track
issues. -
On the day agreement is reached, the Fast Track Session Report will
be completed to document the terms and settlement dollar adjustments. All
parties (Appeals, taxpayer and LMSB) will sign off on the Session Report. -
Appeals will explain to the taxpayer that the settlement is treated
as final for computation purposes, but that the settlement is subject to review
by the Congressional Joint Committee on Taxation. -
LMSB may begin preparing the tax computation and the JC Report, incorporating
the ACM provided by Appeals. -
Appeals will close the FTS case on Form 5402, and will give the ACM
to LMSB for inclusion in their JC Report. -
The LMSB Team Manager may wish to consider requesting an on-sight review
by LMSB JC reviewers prior to submitting the JC Report (see
IRM 4.36.3 ). -
Since the case is in LMSB jurisdiction, LMSB will make the final tax
computation, and write the JC Report. -
On the settled issues, Appeals will respond to any concerns raised by
the JC regrading the basis for settlement. -
Issues resolved between the taxpayer and LMSB without the need for Appeals
settlement authority (resolved within the LMSB Team Managers authority),
will not have an ACM, and LMSB will respond to JC inquires and concerns for
these issues. -
Appeals will prepare the closing agreement on settled issues, and solicit
the taxpayers signature on the closing agreement, but the closing agreement
shall not be signed by Appeals on behalf of the Service until the Joint Committee
on Taxation clearance letter is received. -
After the Joint Committee on Taxation completes consideration of the
settlement, only then will Appeals accept the final settlement by executing
the closing agreement.
-
When the FTS process is completed and all issues are resolved (or determined
to be irresolvable at the LMSB level), LMSB will follow standard closing procedures. -
At the completion of the FTS process, if further issue/case development
is required for FTS or non-FTS issue, it will be completed. -
For successful FTS cases, resolved issues will be included in the Revenue
Agents Report (RAR) in accordance with closing agreements and/or Fast Track
Session reports resulting from the FTS process. -
Issues remaining unresolved will be included in the unagreed RAR, and
a 30-Day Letter will normally be issued inviting the taxpayer to request a
traditional Appeals hearing. -
When some issues are resolved, and other issues remain unagreed, standard
partial agreed procedures will be followed in closing the case. -
When unsuccessful FTS cases come to traditional Appeals, management
will decide how to assign the Appeals personnel. Ex parte restriction will
not be imposed on intra-Appeals communications. -
Compliance audit results will include FTS issue results.
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