The application period for the Compliance Assurance Process (CAP) program is now open—how can it assist your company?
Initiated in 2005, the CAP is a program of the Large Business and International (LB&I) unit that assists corporations maintain compliance by resolving complex tax issues prior to filing—thereby offering a more accurate return and reducing needed examination or investigation after the return has been filed.
Eligibility for the CAP program is limited to:
- Companies that are not currently involved in tax litigation, are not the subject of an IRS investigation, or examination by any other governmental agency that would curtail record review by the IRS.
- The filing entity must have assets of at least $10 million.
- The filing entity must be a publicly traded U.S. corporation with SEC filing requirements or a privately held C-corporation.
The benefit of using the CAP program is the opportunity to reduce the likelihood of a post-filing investigation or audit. Even if there is a post-filing examination, the length of that audit is usually reduced because the IRS has previously vetted records and assisted the entity resolve tax issues before filing. To qualify to apply for the CAP program, corporations must usually submit SEC Forms 10-K, 10-Q, and 8-K.
While the CAP program can reduce the risk of a post-filing audit, it is important to understand the expectations of the filing entity. If accepted into the program, the applicant must sign, return, and adhere to a Memorandum of Understanding (MOU). To be involved in the program, the applicant is essentially agreeing to work with the IRS collaboratively, providing complete and accurate information in response to informal or formal information requests by the IRS. Full disclosure is expected, including identification of offshore tax shelters, and other identified transactions.
If you are considering the CAP program, speak with an experienced tax attorney prior to filing your application. If you would be at risk in an eggshell audit, the CAP program is not a good option for your company. If you apply for the program, and later exit the program prematurely, your company is still eligible for a post-filing examination—and the IRS already has your documentation.
The application deadline is October 31, 2024. Applicants will receive notification by February 2025 whether they have been accepted into the program. The CAP program can be helpful in the right circumstances—make sure of yours before applying.
Work with highly-regarded tax attorneys for a strong defense against IRS prosecution
With offices in Cleveland and Chicago, the legal group at Robert J. Fedor, Esq., LLC delivers skilled representation on criminal tax investigations, compliance issues, tax litigation, and offshore tax concerns. Call 440-250-9709 or contact us online today.
