A primary objective of the Service is to resolve tax controversies at the lowest level without sacrificing the quality and integrity of those determinations. Alternative Dispute Resolution programs achieve this objective.

The IRS Restructuring and Reform Act of 1998 (RRA 98), P.L.105-206 directed the IRS to implement procedures to allow a broader use of early Appeals programs and to establish procedures that allow for alternative dispute resolution including mediation and arbitration.

Announcement 2006-61, 2006-36 IRB 390 establishes the SB/SE FTS program to expedite case resolution and expand the range of dispute resolution options available to SB/SE taxpayers.

The procedures for SB/SE FTS rely on the provisions of Rev. Proc. 2003-40, which implemented a Large and Mid-Size Business Fast Track Settlement Dispute Resolution Program, and allow the use of Appeals settlement authority in SB/SE cases.

SB/SE FTS is a jointly administered service offered by the IRS for the purpose of enabling SB/SE taxpayers and the IRS to work together in resolving disputed issues while the case is in SB/SE jurisdiction.

SB/SE FTS uses mediation techniques to focus issues and lead SB/SE and the taxpayer to self-determine the outcome of the dispute, but if resolution is not reached through mediation, Appeals proposes a resolution, but such proposal is not imposed on either party.

The process generally involves an Appeals Official trained in mediation, the taxpayer, and an SB/SE Group Manager or their designee.

SB/SE FTS allows the parties to utilize Appeals settlement authority under Delegation Order 66 when needed to effect a settlement based on the hazards of litigation. See IRM 1.2.47, Delegation of Authorities for the Appeals Process, and IRM 8.6.4.1.4 which details the Judicial Attitude Toward Settlement.

Ideally, SB/SE FTS is initiated prior to issuance of a 30-day letter for Field Exam cases, and at the time the taxpayer requests an Appeals conference for Office Exam cases. In either case, the case is referred as soon as possible, but always prior to the issuance of a 90-day letter. Either the taxpayer or SB/SE initiates FTS; however, both parties must agree to the process.

To initiate the SB/SE FTS process, SB/SE and the taxpayer jointly complete and sign the "Application for Fast Track Settlement" . The application is then sent to Appeals with the Exam Re-engineering Lead Sheets or Summary of Issues.

A brief written statement of the facts is submitted by the taxpayer along with a statement of their position to facilitate an expeditious resolution. In small cases where total tax for any period is less than $25,000, it is strongly recommended, though not required, that the taxpayer submit a written statement. All documents submitted with the "Application for Fast Track Settlement" complete the "SB/SE FTS Package" and are available to all parties present at the SB/SE FTS session.

If the "Application for Fast Track Settlement" is executed by a person pursuant to a Power of Attorney executed by the taxpayer, that Power of Attorney must express the taxpayer's grant of authority to consent to disclose the taxpayer's returns and return information by the Service to third parties. A copy of the Power of Attorney must be attached to the agreement.

Announcement 2006-61, 2006-36 IRB 390 constitutes a delegation by the Commissioner of Internal Revenue Service of settlement authority to Grade 14, 13 and 12 Appeals Officers assigned to be Appeals FTS Officials for SB/SE FTS cases.

This delegation of settlement authority includes the responsibility for arriving at the final disposition from the Government's perspective, approving the final settlement in accordance with the delegated authority, and executing the appropriate closing documents. This authority may not be re-delegated.

The SB/SE Group Managers and the Appeals Team Managers select and manage cases eligible for SB/SE FTS. The ATM is available to assist the parties in making this determination. If the case qualifies for FTS, the SB/SE representative discusses this option with the taxpayer and explains the benefits of the program.

SB/SE FTS may not be the appropriate dispute resolution process for all cases involving SB/SE taxpayers. The SB/SE Group Manager or their designee, and the taxpayer evaluate their individual circumstances to determine if this process meets their needs.

SB/SE must be fully involved in the process as an equal participant.

SB/SE participants include the SB/SE Group Manager or his/her designee, the examining agent and/or others who have knowledge and expertise which contributes to issue resolution. All three decision making parties must be present at the FTS session.

SB/SE and Appeals management work out local procedures to meet SB/SE FTS time frames and enable effective communication between the functions. Local determinations are made on whether or not the "Application for Fast Track Settlement" and Exam Re-engineering Lead Sheets or Summary of Issues will be faxed to the Appeals point of contact or sent by E-mail via secured messaging.

When Appeals receives an SB/SE FTS case it is important to remember there will be no administrative file, but there will be an "SB/SE FTS Package" which includes the following documents:

Within 5 business days of case assignment, the Appeals Official contacts the taxpayer and SB/SE Group Manager to start the FTS planning process. The Appeals Official identifies, discusses, and determines the number of participants to the FTS session. The Appeals Official shares participant information with all parties. The Appeals Official must ensure all decision-making parties are present during the SB/SE FTS session and encourage the taxpayer's participation.

The Appeals Official schedules the SB/SE FTS session at the servicing Appeals Office or at another neutral site agreeable to the taxpayer and SB/SE.

The Appeals Official has the right to ask either party for additional information if needed to have full understanding of the issues brought forward.

For all issues coordinated as either an Industry Specialty Program (ISP) or Appeals Coordinated Issues (ACI), Appeals follows the procedures in IRM 8.7.3.4, Review and Concurrence Procedures.

To meet the requirements that all decision-makers attend the FTS Session and that Compliance Coordinated Issues/ACI issues are subject to the review & concurrence of the Appeals Coordinator, the Appeals Coordinator serves as a team member and participates in the FTS Session with the taxpayer and SB/SE. If, for whatever reason, the Appeals Coordinator does not participate in the FTS session, settlement of the ISP/ACI issue remains subject to the review and concurrence of the Appeals Coordinator.

If any issue(s) remain unresolved, the taxpayer retains all of the standard appeal rights and SB/SE closes the case as "Unagreed" .

Any unagreed cases coming to Appeals after an FTS session is assigned to a different Appeals Officer.

Upon concluding any unresolved SB/SE FTS session, any notes created by the Appeals Official are destroyed.

A request for participation in the SB/SE FTS process may be withdrawn or terminated at any time.

A withdrawal must occur prior to the FTS session.

If, during an FTS session, it is apparent no further benefit can be derived from the process, any party to the process may terminate the session. The Appeals Official sends a letter to both the taxpayer and SB/SE identifying who participated in the program, listing any unresolved issues and explaining the taxpayer's right to appeal unresolved issues.

The FTS process is confidential with respect to all parties, pursuant to IRC 6103. Therefore, all information concerning any dispute resolution communication is confidential and may not be disclosed by any party except as provided under 5 U.S.C. Section 574. A dispute resolution communication includes all oral and written communications prepared for the purposes of a dispute resolution proceeding. In executing the "Application for Fast Track Settlement" , the taxpayer consents to the disclosure by the IRS of the taxpayer’s returns and return information incident to the settlement process to any participant or observer for the taxpayer. If the "Application for Fast Track Settlement" is executed by a person pursuant to a Power of Attorney executed by the taxpayer, that Power of Attorney must clearly express the taxpayer’s grant of authority consenting to disclosure of their returns and return information by the IRS to third parties, and a copy of the Power of Attorney must be attached to the "Application for Fast Track Settlement" .

The prohibition on ex parte communications between Appeals Officials and other Internal Revenue Service employees does not apply to the communications arising in SB/SE FTS. This is because the Appeals Officials are not acting in their traditional settlement role and jurisdiction of the case remains with SB/SE. See Rev. Proc. 2000-43 for guidance on ex parte communications.

On SB/SE FTS cases returned for traditional Appeals consideration, ex parte restrictions are not imposed on intra-Appeals communications, and Appeals management will take appropriate measures to ensure these cases are handled fairly and impartially. Ex-parte restrictionswill apply to communication between Appeals and other IRS functions, including SB/SE.

When an SB/SE FTS case is closed (fully or partially resolved, not resolved, terminated), the Appeals Official prepares an "SB/SE FTS Closing Package" which will be routed to the ATM, the Appeals Processing Section (APS) and SB/SE.

All SB/SE FTS cases identified on ACDS with Feature code LB must be forwarded to AQMS for review. AQMS automatically selects these cases for review and a case routing slip is generated for each case. Please make copies of the entire SB/SE FTS Closing Package as listed above, and forward to:

At the conclusion of the SB/SE FTS session, the Appeals Official provides a Customer Satisfaction Survey to the taxpayer along with a return envelope. The Appeals Official explains that the survey is voluntary but strongly encourages its completion, so information can be gathered for evaluating and improving the overall SB/SE FTS process. Return the survey to:

SB/SE and Appeals participants are also encouraged to take an on-line customer satisfaction survey located at http://appeals.web.irs.gov/adr/fasttrack.htm.