In LB&I FTS, ATCLs and AOs are not acting in their traditional Appeals settlement role. As a result, the prohibition on ex parte communications between Appeals and other Internal Revenue Service employees provided by Section 1001(a)(4) of the Internal Revenue Service Restructuring and Reform Act of 1998 does not apply to the communications in the process.

If the LB&I FTS process is unsuccessful -

See also Section 2.05 of Rev. Proc. 2012-18 and IRM 8.1.10.3.6 for information on ex parte for FTS.

Appeals Hazards Settlements:

Mediated Agreements:

LB&I is fully involved in the LB&I FTS process as an equal participant.

LB&I participants include the LB&I Team Manager, Revenue Agents and others who have the knowledge and expertise to contribute to issue resolution.

In addition to the Team Manager, LB&I participants generally include the Team Coordinator and/or Revenue Agents primarily responsible for the development of the subject issue(s).

LB&I participants also include Specialists and/or Technical Advisors. In those instances where the issues are industry specific or there is a Technical Advisory position established for the issue, the participation of appropriate Technical Advisors is strongly recommended.

The LB&I Team Manager, in consultation with the assigned ATCL or AO, determines the LB&I participants.

For CAP issues, LB&I participants include the Team Manager, and the LB&I Account Coordinator (AC), as well as any Specialists and/or Technical Advisors, if needed. If necessary, the LB&I Territory Manager and the Director of Field Operations also participate in the FTS process.

Within ten business days after assignment of the case, the ATCL or AO calls the taxpayer and the LB&I Team Manager to start the FTS session planning process and follows-up in writing with an FTS Acknowledgement Letter. The ATCL or AO should document the case activity record when these actions have been taken.

The ATCL or AO identifies and discusses the need to limit the number of participants in the FTS session.

LB&I FTS cases are excluded from the Settlement Authority Panel Review, because LB&I must agree to any disposition of the issues.

Where an issue is coordinated, the ATCL or AO follows the procedures in IRM 8.7.3.2, Coordinated and Appeals Emerging Issues.

To meet the requirements that all decision-makers attend the LB&I FTS session, and that coordinated issues be reviewed by the Appeals Domestic /International Technical Specialist, the Appeals Technical Specialist generally serves as a team member and participates in the FTS session with the taxpayer and LB&I.

If the Appeals Technical Specialist is not part of the Fast Track Team, settlement of the coordinated issue remains subject to the review and concurrence of the Appeals Technical Specialist. This is accomplished via telephone discussion, review and concurrence.

If there is a disagreement between the Appeals Technical Specialist and the ATCL or AO on appropriate settlement terms for the issue, follow the resolution procedures in IRM 8.7.3.4., Review and Concurrence Procedures.

Bankruptcy cases are accepted when LB&I follows the IRM provisions regarding notification to Chief Counsel and the Justice Department.

TEFRA cases are accepted under limited circumstances with the concurrence of both the Appeals Fast Track Program Manager and the LB&I Territory Manager.

LB&I FTS is used for cases in a TEFRA proceeding where the first level partnership and the major controlling partners are included in the FTS session.

LB&I must agree to maintain responsibility for both the partnership and the partner statutes, and to complete the required TEFRA administrative proceedings, including NOPA, NBAP and FPAA procedures, and to secure and process partner settlement agreements for all levels.

An ATCL or AO conducts the FTS session at the first entity level and helps the parties reach a settlement.

Secure the following Waiver on Assessment agreements from the partners:

Generally, a closing agreement is not used in TEFRA cases, but may be used at the option of the parties. Refer to IRM 8.13.1.2.6 for guidance in preparing closing agreements for partners in a TEFRA partnership.

The Appeals Official signs Form 870-P(AD) or Form 870-PT(AD) for all partners when he/she uses the settlement authority delegated to him/her to resolve issues based on an analysis of the hazards of litigation. If an Appeals Official does not use his/her settlement authority, LB&I secures Form 870-P or Form 870-PT from all partners.

FTS is available on an issue-by-issue basis for LB&I cases participating in the Compliance Assurance Process (CAP). The IRS formally announced CAP in Announcement 2005-87, 2005-50 I.R.B. CAP is an LB&I program designed to resolve tax issues prior to the filing of a tax return.

For LB&I taxpayers participating in CAP who do not utilize FTS prior to the return being filed, the option is available to elect FTS during the post-filing examination process. An exception is a change in facts and circumstances the parties subsequently agree merits the use of FTS.

Fully developed, but unagreed issues not resolved using FTS during pre-filing are incorporated into a 30-day letter once the return is filed and the case is forwarded through the traditional Appeals process for CAP issues.

Binding arbitration is not an option available for CAP issues.

The agreed resolution is incorporated into the appropriate closing agreement for LB&I CAP issues resolved during the FTS session.

Non-LB&I cases are accepted under Section 3.02 of Rev. Proc. 2003-40 when the Appeals Fast Track Program Manager and the referring Operating Division’s first line management concur.

If the Appeals Fast Track Program Manager determines the case is eligible, he/she signs the Application to Fast Track Settlement and forwards it to the local ATM for concurrence.

If the ATM concurs with the acceptance of the application, he/she signs the "Application for Fast Track Settlement" and faxes a signed copy to the Appeals Fast Track Program Manager.

Another ATM can be assigned to do the review if the first ATM notifies the Appeals Fast Track Program Manager that he/she does not recommend acceptance.

If the Appeals Fast Track Program Manager or ATM determines that a case does not qualify for LB&I FTS (e.g. issues not fully developed, issues do not qualify, Appeals resources are not available, issues excluded), the ATM discusses the reason(s) for the denial with the Appeals Fast Track Program Manager.

Requests for Technical Advice, Field Service Advice, etc. are not made during the LB&I FTS process. Cases requiring such issue development actions are not ready for Fast Track, and the Appeals Fast Track Program Manger or ATM recommends rejection.

The Appeals Fast Track Program Manager may concur with a recommended denial of the LB&I FTS request by an ATM, or may accept the case and identify necessary resources.

If the LB&I FTS request is recommended for rejection, the Appeals Fast Track Program Manager discusses the reason(s) for rejection with the LB&I Territory Manager.

The Appeals Fast Track Program Manager notifies both the taxpayer and LB&I Team Manager of the reason(s) for the denial within ten business days of receipt of the "Application for Fast Track Settlement."

The "Application for Fast Track Settlement" must be signed by the ATM, the Appeals Fast Track Program Manager and the LB&I Territory Manager before the case is input into ACDS.

Carding in a Fast Track Settlement case is given priority treatment.

When carding in the LB&I FTS case, the Lead Large Case Processor (LLCP) follows the general provisions for carding in cases contained in IRM 8.20.5.1, Appeals Processing Manual, Processing and Establishing New Receipts. However, the following special entries are made on the case inventory screen:

Add return level information as follows:

The LLCP will obtain IDRS Command Code AMDISA research to verify whether the case is in Status 15 with an Aging Reason Code (ARC) 23. If these codes are present, 15-23 will be entered into the LOC9 Field on ACDS.

The FT Session Report, Form 14000, assists the parties in planning the LB&I FTS session and reports progress on the issues in dispute.

Use the FT Session Report to identify the issues and reflect agreement by all parties on the number and description of issues, the amounts in dispute, conference dates, and a plan of action to follow in the LB&I FTS process.

In addition to documenting all contacts in the ACDS activity record and conference notes, the ATCL or AO uses the FT Session Report at the start of the process, and updates it as decisions are made.

The ATCL or AO gives the taxpayer and LB&I a copy of the FT Session Report at the beginning of the process with Letter 4365, FTS Acknowledgement Letter, and after each decision is reached and the report is updated. He/She confirms the parties agree with all entries.

At the conclusion of the process, the FT Session Report forms the basis for drafting closing agreements and the Revenue Agent’s Report (RAR).

The ATCL or AO solicits signatures of the taxpayer and LB&I Team Manager at the conclusion of the session whether agreed or unagreed. Signing the FT Session Report does not constitute a final settlement. The signatures carry no more force and effect than a memorandum of understanding between the parties.

The FT Session Report is not a waiver of restrictions on assessment, does not terminate consents to extend the statute of limitations, nor does it start the running of any statute of limitations, in particular the one-year statute under IRC 6229(f) involving TEFRA proceedings.

LB&I FTS cases involving TEFRA partnerships must include the above language on the face of the FTS Session Report.

The signature of a Service official on the FT Session Report does not create a promise against reopening the case.

When conducting the LB&I FTS session, the ATCL or AO uses a FTS Session Report and an agenda. The agenda guides the communication, sets the order of issue discussion, asks questions to clarify each issue and guides conference meetings.

The ATCL or AO provides the FTS Session Report to all decision makers early in the process, and updates it as the session progresses.

The LB&I FTS session is led by Appeals, but all three parties are active participants with equal voices.

LB&I FTS employs various alternative dispute resolution techniques to propose solutions.

Appeals does not act in a traditional Appeals role, but first uses an interest-based approach to facilitate a settlement of the issues between the parties.

Using mediation techniques, Appeals attempts to bring the parties to a mutual resolution of the issues during the FTS session.

Appeals may conduct the entire LB&I FTS session jointly with LB&I and the taxpayer, or with LB&I and the taxpayer separately after an initial joint session.

As issues are resolved, Appeals posts the results to the FTS Session Report and gives an updated copy to all participants. Appeals maintains a history of the updated FTS Session Reports.

If the taxpayer or LB&I presents new information during the LB&I FTS session, Appeals gives the receiving party adequate time to evaluate it.

If consideration of substantial new information unacceptably delays the FTS session, Appeals withdraws the case from LB&I FTS. The case is resubmitted for acceptance into LB&I FTS after the issues are fully developed.

In situations where substantial new information is disclosed as part of the FTS process, the information serves as a basis to raise a new issue or file a claim. Where the process is not delayed beyond 120 calendar days , and all parties agree to accept the new issue or claim, it is accepted into the existing LB&I FTS process.

Once a case comes to LB&I FTS, the expectation is that all issues and claims were raised, all relevant information is disclosed, and the case is ready for resolution. The ATCL or AO confirms all issues are listed on the FTS Session Report at the beginning of the process.

New issues or claims are generally not accepted if the FTS process cannot be completed within 120 calendar days.

The grounds for raising a new issue or claim must be substantial, and the potential effect on the tax liability must be material. New issues or claims are not raised to trade against existing issues.

A taxpayer’s claim requires LB&I action. However, such action need not be part of the LB&I FTS process.

New, unrelated claims or new issues raised are not attached to an existing FTS process, but generally are considered in a separate process outside of FTS.

While the parties work to resolve the issues originally referred to LB&I FTS, the process is not suspended to allow examination of the new issues/claims.

If the taxpayer declines to bring the LB&I FTS process to a conclusion prior to consideration of such claims, the Service withdraws the case from LB&I FTS. The taxpayer then reapplies for LB&I FTS after LB&I completes a review of the new claim.

NEW ISSUES - To raise a new issue, there must be good, sound, substantial grounds already existing in the record or known to the decision maker. Substantial grounds are those that cause a decision maker to be quite certain, at the time a new issue is raised, that the Government will prevail if the issue is litigated. Quite certain does not necessarily mean 100 percent certain, but it does mean a very high degree of certainty.

If after a reasonable time, it is apparent no further benefit will be derived from the process, the LB&I Team Manager and/or the ATCL or AO considers terminating the session. If it is determined the session should be terminated, he/she consults the Appeals Fast Track Program Manager before making the final decision to terminate the session.

A decision by the LB&I Team Manager to terminate the FTS session requires concurrence of the appropriate LB&I Territory Manager.

If no issues are resolved prior to termination, no further reporting to the taxpayer or LB&I by Appeals are required.

If some issues are resolved at the time of termination, follow standard LB&I FTS process closing procedures for the resolved issues.

The taxpayer retains all standard appeal rights with regard to any issues remaining unresolved at the time of termination. However, the traditional appeal will not be assigned to the same ATCL or AO that heard the FTS session, unless concurrence is received in writing from the taxpayer and LB&I prior to assignment.

If after assignment, it is determined a case is not ready for the LB&I FTS process, or there is a change in status, the ATCL or AO discusses withdrawal of the case with the appropriate Appeals Fast Track Program Manager and Appeals Team Manager.

A change in status may include but is not limited to filing for bankruptcy, a change in corporate structure, finding the case is not sufficiently developed to proceed, or a determination on a Service-wide basis that a particular issue is not subject to a negotiated settlement.

In the event of the withdrawal of a case, the ATCL or AO -

A case may be withdrawn without prejudice, and after the question is addressed, the "Application for Fast Track" may be reconsidered.

When resubmitting a withdrawn case, management decides how to assign an ATCL or AO. Ex parte restrictions are not imposed on intra-Appeals communications. Appeals management takes appropriate action to fulfill the Appeals Mission to be fair and impartial. This policy must be made clear to the taxpayer at the beginning of the process, and if the taxpayer is unable to accept this policy, the taxpayer may decide to forego the LB&I FTS option and go to traditional Appeals.

The taxpayer may withdraw from LB&I FTS at any time by providing written notice to the LB&I Team Manager and the ATCL or AO.

For any unresolved issue(s), taxpayers retain all traditional appeal rights. However, the traditional appeal will not be assigned to the same ATCL or AO who heard the FTS session, unless the taxpayer and LB&I provides written concurrence is received prior to assignment.

When a taxpayer requests an Appeals hearing and submits an acceptable protest, LB&I closes the case as "Unagreed" or "Partially Agreed," as appropriate, and forwards the case to Appeals.

The taxpayer is advised that the case will be closed using the standard LB&I closing process.

The following details the distribution for the closing agreement:

Send the taxpayer the closing agreement with a closing letter containing the following text:

For CAP issues, forward the closing letter to the LB&I AC and LB&I Team Manager.

For issues settled using Appeals settlement authority, Appeals prepares a brief ACM and a closing agreement. A brief ACM summarizes the significant facts, body of law relied upon by the parties, and includes a brief evaluation and recommendation on whether the disposition should be accepted.

For issues settled using the authority of the LB&I Team Manager rather than Appeals settlement authority, Appeals does not prepare an ACM. Appeals may be asked to assist in preparing a closing agreement for LB&I resolved issues, but an authorized LB&I manager executes the closing agreement.

No ACM is required for issues not resolved in the FTS session.

The ATCL or AO prepares Form 5402 and includes the following entries:

Follow special procedures in cases subject to Joint Committee reporting requirements.

Upon assignment of an LB&I FTS case, Appeals must confer with both the taxpayer and LB&I to determine whether the case is subject to Joint Committee reporting requirements, and record the results in the ACDS case activity record.

At the completion of the LB&I FTS process, the case status relative to Joint Committee reporting is reconfirmed, taking into consideration the results of the settlement process, before finalizing the settlement.

When issues are resolved by Appeals using delegated settlement authority, Appeals is responsible for preparing an ACM and providing a copy to LB&I for inclusion in their Joint Committee Report.

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, and 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.

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.

Immediately after the taxpayer signs the closing agreement, Appeals closes the case on ACDS using Form 5402. The ATCL or AO notes in Item 11, Remarks, on the Form 5402: "The closing agreement should be returned to Appeals for signature after the Joint Committee completes consideration of the settlement."

Since the case is in LB&I jurisdiction, LB&I makes the final tax computation, and writes the Joint Committee Report. Appeals prepares an ACM explaining only those LB&I FTS issues resolved with Appeals settlement authority. The explanation provides sufficient detail and analysis to apprise the Joint Committee of the Appeals evaluation and settlement of the LB&I Fast Track issues. On the settled issues, Appeals responds to any concerns raised by the Joint Committee.

LB&I includes the Form 5402, ACM and closing agreement in their Joint Committee Report.

Issues resolved between the taxpayer and LB&I without the need for Appeals settlement authority (resolved within the LB&I Team Manager’s authority), are written up by LB&I who will respond to Joint Committee concerns for these issues.

When the LB&I FTS case is completed, submit a "LB&I FTS Closing Package" to the following:

The "LB&I FTS Closing Package" consists of:

Close the administrative file along with the LB&I Team Manager's closing package to the LLCP and flag it with LB&I Fast Track Settlement - Expedite Handling

The ATCL or AO forwards the Appeals Fast Track Program Manager's closing package directly to the Appeals Fast Track Program Manager (or designee).

The general provision for LLCP closing procedures is found in IRM 8.20.7, Appeals Processing Manual - Appeals Case Closures.

The package is forwarded to the Appeals Fast Track Program Manager.

The LLCP returns the administrative file and "LB&I FTS Closing Package" to LB&I using Form 3210.