IRS Announces Fast Track Settlemet for Small Business

November 13, 2013

pic-IRSThe IRS announced Nov. 6, 2013 they will begin to extend their existing Fast Track Settlement (FTS) program to small businesses being audited in order to provide a more timely, easy way to settle IRS discrepancies. As part of a July 17, 2013 House Small Business Committee hearing on the IRS treatment of small business, IRS Principal Deputy Commissioner Daniel Werfel stated that, “in FY 2012, the average cycle time for small business audits was 264 days.”

According to NSBA’s 2013 Mid-Year Economic Report, over the last 10 years, close to half of small businesses (43 percent) have been the subject of an IRS audit or follow-up action, and of those, the majority of interactions were, in fact, an audit.

The IRS FTS program is aimed at addressing the high rate of small-business audits as well as the lengthy time it takes small businesses to resolve the issue. A similar FTS program has been available to large and mid-size businesses for some time. The result, according to IRS, is that audit issues can “usually be resolved within 60 days, rather than months or years.”

One key item of note is the fact that, even if a small business does opt to utilize the FTS program, they still have the right to appeal the IRS audit if the FTS process proves unsuccessful. This new FTS program will be administered jointly by the Small Business/Self Employed division of the IRS and the IRS appeals office whereby a representative from the appeals office will serve as the mediator.

Given that the administrative burden of federal taxes is a larger problem for small business than the actual financial burden, according to NSBA’s annual Taxation Survey, this is a positive step in the right direction for small business.

Please click here for more details from IRS.