A revenue procedure recently issued by the Internal Revenue Service may offer a settlement advantage to small business owners who find themselves embroiled in a tax controversy.
Specifically, Revenue Procedure 2017-25 sets up an administrative option called the Small Business/Self Employed Fast Track Settlement program. The main benefit of the program is that it offers taxpayers who work at small businesses or for themselves the ability to negotiate while their dispute is still under the review of the IRS’s SB/SE division.
As a law firm that has represented clients in tax disputes, we recognize the option of reaching a favorable settlement while the case is still in the administrative stage. True, there are judicial forums available to taxpayers, such as the U.S. Tax Court or the U.S. District Courts. However, a prolonged tax dispute often translates into higher legal fees, and possibly implications to a taxpayer’s credit score resulting from an IRS tax lien filing. An early settlement with IRS officials may save a taxpayer both time and money.
Our law firm has experience negotiating with the IRS. With the instant small business program, the IRS would utilize alternative dispute resolution techniques. This process would occur even before other administrative options have been exhausted, such as a formal administrative appeal. According to the IRS, a small business owner may be able to resolve a tax audit issue within 60 days. Other administrative options, or even tax litigation, could take months or years.
There is one caveat: the IRS may conclude that a taxpayer lacks good faith if he or she ignored IRS correspondence. For that reason, our law firm recommends consulting with a tax attorney as soon as a dispute arises. We will represent you through the process of negotiations and providing documentation during an IRS tax audit.
Source: Accounting Today, “IRS formally establishes Fast Track Settlement program for small businesses,” Michael Cohn, Mar. 22, 2017