On November 6, 2013, the IRS announced the nationwide rollout of its Fast Track Settlement (“FTS”) program, a streamlined program designed to help small businesses and self-employed individuals who are under examination by the IRS’ Small Business/Self Employed (“SB/SE”) Division more quickly settle their differences with the IRS. Prior to yesterday’s announcement, the FTS program was a pilot program whose availability was limited to certain jurisdictions.
The FTS program, now available nationwide, is structured to expedite SB/SE case settlement through alternative dispute resolution techniques. The techniques utilized by the program, as stated in the IRS’ Announcement 2011-5, “enable SB/SE taxpayers that currently have unagreed issues in at least one open year under examination to work together with SB/SE and the Office of Appeals to resolve outstanding issues while the case is still in SB/SE jurisdiction.” The program is designed to save taxpayers time and to avoid formal appeals and lengthy litigation processes.
Subject to certain exceptions listed in Announcement 2011-5, the FTS program is generally available for cases under the jurisdiction of the IRS’ SB/SE Division if: (1) the issue(s) in dispute are fully developed, (2) the taxpayer has submitted a written statement responding to the IRS’ position on the disputed issue(s) and (3) there are a limited number of issues in dispute. A taxpayer who is interested in participating in the FTS program, or who has questions about the program and its suitability for the taxpayer’s case, should contact the Examination or Specialty Program group manager for the audit. To apply for the FTS program, the taxpayer and the group manager must submit a Form 14017, Application for Fast Track Settlement to the Appeals Team Manager, along with the taxpayer’s written response to the IRS’ stated position on the disputed issue(s). More background on the program and the application process is provided in Announcement 2011-15 and on the IRS’ Alternative Dispute Resolution webpage.
Yesterday, November 4, 2013, the IRS issued a directive to its Large Business and International examiners and specialists regarding a soon-to-be implemented Information Document Request (“IDR”) enforcement process. The new IDR enforcement process, currently set to take effect January 2, 2014, requires examiners in the Large Business and International division to use a three step enforcement process when a taxpayer does not timely respond to an applicable IDR. The enforcement process only applies to IDRs issued (1) on or after June 30, 2013 and (2) in accordance with recent IRS guidelines requiring issue-focused requests and a discussion between the examiner and the taxpayer establishing a response date. The thirteen requirements for issuing IDRs are provided in Attachment 1 to the November 4 directive and guidelines on issuing IDRs are detailed in a June 18, 2013 directive.
If a taxpayer does not timely respond to a IDR that is subject to the new enforcement process, a three step process is set in motion, consisting of: (1) a Delinquency Notice providing a set amount of time to comply, (2) if the taxpayer does not provide a complete response to the IDR by the date set in the Delinquency Notice, a Pre-Summons Letter requiring response by another set date, and (3) if a complete response to the IDR is not provided by the response date in the Pre-Summons Letter, a Summons for the information.
Although this new enforcement process for the Large Business and International Division will take effect January 2, 2014, the directive states that no Delinquency Notices will be issued prior to February 3, 2014. Corporate taxpayers who receive an IDR that is dated June 30, 2013 or after may be subject to the new enforcement process and should be aware of both the revised audit process (as detailed in the June 18, 2013 directive) and the response dates required by such process and the new enforcement process discussed in the November 4, 2013 directive.
The IRS issued a news release on October 22, 2013 announcing that, as a result of the 16-day government shutdown, the agency will delay the start of the 2014 tax filing season by one to two weeks. The news release, available here, provides that the IRS will begin accepting and processing 2013 individual tax returns no earlier than January 28, 2014 and no later than February 4, 2014, a one to two week delay from the original start date of January 21, 2014. The release states that the exact start date will be announced in December 2013 and that there is no advantage to filing a paper tax return before the opening date. Rather, the agency encourages taxpayers to e-file their tax returns and request to receive their refunds by direct deposit, stating that such taxpayers will “receive their tax refunds much faster.” Notably, the news release confirms that the April 15, 2014 filing deadline for 2013 tax returns, set by statute, will remain in place. Taxpayers may request an automatic six-month filing extension by filing a Form 4868 with the IRS on or prior to April 15, 2014.
Although the IRS resumed operations on October 17, 2013 (see prior post here), the agency is still continuing to assess the impact of the shutdown on its operations. Taxpayers should be mindful of the IRS’ request in the news release to wait to call or visit the agency if a tax issue is not urgent.