West Michigan TEI / IRS Meeting,
May 12, 2011
By: Fred Gavin, Appeals Team Case Leader, Detroit Appeals Office
(313) 628-3005
Fred.l.gavin@irs.gov
477 Michigan Avenue, Room 565, Stop 33
Detroit, MI 48226-2523
_______________________________________
Linda G. Colemon
FTS Program Manager - East
Appeals Team Case Leader
1835 Assembly Street, Rm 508, MDP 43, Columbia, SC 29201
Office: 803.253.3739 Fax: 803.253.3749
Email: Linda.G.Colemon@irs.gov
What is Fast Track Settlement (FTS)?
Fast Track Settlement is
a collaborative alternative
dispute resolution
process that utilizes
mediation techniques to
focus issues and lead the
parties to self-determine
the outcome of the
dispute.
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FTS Program Objectives
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Increase issue resolution at lowest level
Use Appeals tools in LB&I
Decrease overall time from return filing to
ultimate resolution
Meet needs of LB&I
Reduce burden for the Taxpayer and Service
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Fast Track Settlement – LB&I
80
60
40
20
0
FY07
FY08
FY09
FY10
DEC-FY11
Receipts
79
67
65
65
24
Resolutions
61
68
64
64
18
Inventory
24
22
20
19
25
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LB&I Fast Track Settlement Application Instructions
http://lmsb.irs.gov/hq/pqa/downloads_FTS/FTSApplicationInstructions.asp
Fast Track Settlement Application Instructions
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Please contact the Appeals FTS Program Managers (East or West) or the LB&I FTS Program
Coordinator, Monica B. Jones if you have questions regarding the eligibility of an issue for Fast Track
Settlement. In an effort to expedite the Fast Track Settlement (FTS) application process, Appeals and
LB&I have established the FTS mailbox. You should submit the FTS Application package electronically
via the FTS mailbox. However, if your application package is voluminous, please contact the
appropriate FTS Appeals Program Manager (East or West) to make other arrangements for submission.
The FTS application should be submitted along with the following documents:
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FTS Application (Form 14017 - save in .pdf format) Please ensure the bottom portion of the application
form is filled out.
Issue Statement
NOPA (Form 5701 and 886-A)
List of Participants and titles (LB&I and Taxpayer)
Taxpayer's written response (a formal protest is not required - save in .pdf format)
Form 2848 (if applicable - save in .pdf format)
Please scan and save documents in .pdf format. Only one application should be submitted for
each case (please do not separate signatures on separate applications).
Please make sure the Taxpayer or Taxpayer’s Representative, Team Manager, and Territory Manager
(TM) have signed the application before you submit the package.
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Role of Appeals FTS Program Manager
• Responsible for Managing the Fast Track
Program
• Serve all Stakeholders
• Screen Applications
• Outreach Presentations
• Fast Track Reports
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Overview - LB&I/Appeals FTS Process
START
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LB&I will explain the Fast Track Settlement process to the taxpayer and determine
whether the case qualifies for Fast Track Settlement. IRM 4.51.4.4.2(1)
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Is the case qualified for Fast Track Settlement?
NO
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Any request for FTS denied to the taxpayer by LB&I Team Manager requires
concurrence of the LB&I Territory Manager. The Team Manager forwards a copy of
any denied request along with a brief statement as to the reasons for denial to the
LB&I Territory Manager requesting concurrence. IRM 4.51.4.4.2(5)&(6)
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Does the Territory Manager concur?
YES
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The standard examination procedures and closing process are followed.
END
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Overview - LB&I/Appeals FTS Process
START
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LB&I determines the case qualified for Fast Track Settlement
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When the Application for Fast Track Settlement, Form 14017 is ready to submit and is
signed by the appropriate LB&I Territory Manager, the referring LB&I Team Manager
sends the application to the Appeals Fast Track Program Manager using the Fast
Track Mailbox. *AP ATCL FTS. IRM 8.26.1.9(1).
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Within three business days of receipt, the Appeals FTS Program Manager reviews
the Application to determine if eligible.
YES
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The Appeals FTS Program manager signs the Application and forwards it to the local
ATM for concurrence and assignment. IRM 8.26.1.9.1
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Does ATM concur with acceptance?
YES
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Overview - LB&I/Appeals FTS Process
•
If the ATM concurs with the acceptance of the application, he/she signs the
application and sends to the Appeals FTS Program Manager.
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Upon acceptance and within 7 days of the receipt of the Application, the ATM will
assign the case to an ATCL or AO. The ATM will send the application and related
materials to the ATCL/AO. IRM 8.26.1.11(1).
DENIAL
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If the Appeals FTS Program Manager or ATM determines that a case does not qualify
for LB&I FTS, the Appeals FTS Program Manager discusses the reason(s) for
rejection with the LB&I Territory Manager and within 10 days of the receipt of the
application, notifies both the taxpayer and the LB&I Team Manager of the reason(s)
for the denial and the process ends. IRM 8.26.1.9.2(4)&(5)
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The decision not to approve an application for the FTS program is final and not
subject to administrative appeal or judicial review. Rev Proc 2003-40, Section 4 .02
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Overview - LB&I/Appeals FTS Process
Working
FTS
Case
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Within 10 business days of assignment, the ATCL/AO will call the taxpayer and the
LB&I Team Manager to start the FTS session. The contact will be followed up with
an FTS Acknowledgement Letter Form 14000 and a copy of the FTS Session Report.
IRM 8.26.1.5.2(1) & 8.26.1.12.1
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The ATCL/AO will schedule Planning phone conferences and Settlement sessions as
needed. The ATCL/AO solicits signatures of the taxpayer and the LB&I Team
Manager at the conclusion of the session, whether or not agreed or unagreed.
Signing the Session Report does not constitute a final settlement but the session
report should be modified for TEFRA partnerships or potential Joint Committee cases.
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Overview - LB&I/Appeals FTS Process
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Except with the concurrence of the LB&I Territory Manager and the Appeals FTS
Program manager, the FTS process is limited to 120 calendar days. After a
reasonable time, but at least before the 120 calendar days, the ATCL/AO should
consider whether any further benefit will be derived from the process. IRM 8.26.1.9(5)
Progress
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Send an e-mail to the LB&I Territory Manager and the Appeals FTS Program
Manager seeking concurrence to keep the case open past the 120 days.
No
Progress
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Consult with the Appeals FTS Program Manager before making the final decision to
terminate and then send termination letter. IRM 8.26.1.12.5(1)
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Overview - LB&I/Appeals FTS Process
FTS
Session
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The ATCL/AO may ultimately make a recommendation regarding the settlement of
any or all issues (both factual and legal). Neither party is required to accept a
proposal. IRM 8.26.1.13(2)
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On the day agreement is reached, the terms and dollar adjustments of the resolved
issues are documented on the FT Session Report. All parties (Appeals, LB&I and the
taxpayer) sign-off on the FT Session Report. For issues settled using Appeals
settlement authority, Appeals prepares a brief ACM and a closing agreement. For
issues settled using the authority of the LB&I Team Manager rather than Appeals
settlement authority, Appeals does not prepare an ACM. No ACM is required for
issues not resolved in the FTS session. IRM 8.26.1.17.2
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Overview - LB&I/Appeals FTS Process
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When the LB&I FTS process is unsuccessful in resolving an issue (including
withdrawn issues), Appeals sends a letter to both the taxpayer and LB&I identifying
who participated in the process, listing the issues not resolved, and explaining the
taxpayer’s rights to appeal. The administrative file consisting of the Form 5701 with
the taxpayer’s written response, any FTS workpapers prepared by LB&I and Form
5402 are provided to LB&I for inclusion in the case file. No Appeals Case
Memorandum (ACM) is prepared for unresolved issues. IRM 8.26.1.15 (2) &(3).
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When the LB&I FTS process is successful and is a potential Joint Committee case,
LB&I begins preparing the tax computation and the Joint Committee Report. Appeals
explains to the taxpayer that the agreement is treated as final for computation
purposes, but it is subject to review by the Congressional Joint Committee on
Taxation. IRM 8.26.1.17.4 (5)
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Appeals prepares the closing agreement on settled issues, and solicits the taxpayer’s
signature on the closing agreement, but the closing agreement is not signed by
Appeals until the Joint Committee clearance letter is received. IRM 8.26.1.17.4 (6)
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Overview - LB&I/Appeals FTS Process
•
When the LB&I FTS process is successful and is not a potential Joint Committee
case, Appeals sends the taxpayer the closing agreement with a closing letter
containing the following text:
“The agreement we reached on your LB&I FTS case has been approved and we will
return the file to LB&I so that they may complete processing of your case. The
enclosed copy of the accepted closing agreement is for your records. The LB&I team
will compute the tax and give you a report. If you have any questions, please call me
at the phone number shown above.” IRM 8.26.1.17.1 (2)
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Overview - LB&I/Appeals FTS Process
Closing
FTS
Case
The “LB&I FTS Closing Package” is sent to the LB&I Manager and consists of:
a. Form 5402
b. ACM (if required)
c. Agreement Forms (Form 870-AD or Closing Agreement if required)
d. FT Session Report(s) Form 14000
e. Agenda(s)
f. All correspondence received from and sent to the taxpayer/representative
IRM 8.26.1.17.5 (2)
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Common Barriers in the FTS Process
Getting the Fast Track Session Scheduled
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Getting the parties to agree on a time and place
Getting the right people to the session (decision-makers)
Lack of understanding of the negotiation process
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Doesn’t want to be there
Insists on deciding right or wrong rather than a settlement
Won’t discuss differences and agreements
Failure of proper preparation
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Facts not fully understood
New facts presented
No agreement as to what the dispute is
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Common Barriers to Settlements
Failure of Effective Communication
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Not considering the other sides frame of reference
Inability to express thoughts clearly
Defensiveness
Negative feelings toward the other side
Hidden agendas
Poor listening
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Common Barriers to Settlements
Outside Pressures
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Need to justify a position to a boss
Wanting to set an example for future
Wanting to look good to a superior
Different Motivations
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Different attitudes toward the desirability of a prompt settlement
Different attitudes towards risks
Different perceptions of alternatives
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Common Barriers to Settlements
Extrinsic Factors
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Link to other disputes
Negative feelings for other party
Desire to punish or embarrass rather than cooperate
Fear of unknown or future
Unrealistic Expectations
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Wants more than just a resolution of the issue
Wants something from a party that is not present
Wants something that a party cannot control or give
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Role of Appeals FTS Mediator
Session Planning
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Make sure the parties understand the process
Make sure the parties agree as to what is at issue
Make sure the decision-makers are in the room to the extent
possible
Session Management
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Make sure the facilities are conducive to the session and not
distracting
Make sure to set the ground rules and keep the discussion civil
Make sure to give each side time to talk without interruption
Keep discussions on track and don’t let them become personal
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Role of Appeals FTS Mediator
Help the Parties to Analyze and Negotiate
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Point out items the parties agree to
Listen for “hidden concerns” and get the parties to recognize them
Ask questions to make sure one side is hearing the other
Help the parties prioritize their own needs and desires
Avoid jumping to conclusions before the parties have finished
Remind the parties of reality and what are reasonable
expectations
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Role of Appeals FTS Mediator
Overcoming Impasse
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Hold sidebar meetings with only the principle negotiators
Ask them to explain why the other party should accept their
proposal
Ask them “what if” scenarios about what proposal they would
accept
Ask them to put themselves in the other’s shoes and explain how
they would solve the other party’s needs
Adjourn the process and allow for a cooling off period
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Tips for Success
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Understanding the FTS Process
Commitment to 120 Day Time Frame
Effective Communication and Transparency
Proper Session Preparation
Understanding the FTS Session Negotiation
Process
• Removal of Common Barriers
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Questions
Open Forum
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