The IRS Large Business and International (LB&I) division appears to be weighing changes to the “compliance assurance process” (CAP) program.
The CAP program allows large corporate taxpayers to work collaboratively with an IRS team to identify and resolve potential tax issues before tax returns are filed. The CAP program began as a pilot program in 2005 with 17 taxpayers. It was made permanent in 2011, and now includes 181 taxpayers. The CAP program consists of three phases: CAP, pre-CAP, and Compliance Maintenance phases.
The LB&I posted a release (“IRS continues comprehensive assessment of the CAP program”) announcing:
According to the IRS, since no new taxpayers will be accepted into the CAP program for the 2017 application season:
Since the IRS launch a new issue-focused approach a year ago, LB&I division leaders have made a variety of public comments suggesting that the CAP program would be re-evaluated as part of LB&I’s overall shift concerning how it intends to focus its resources. Some commentary has suggested that the CAP program requires a significant investment of IRS resources for fewer than 200 largely compliant taxpayers. Yet, it also seems that the CAP program provides the IRS with extremely useful understanding and visibility concerning the current business and economic environment and transactions that are actually being conducted within specific industries.
Historically non-CAP program large taxpayer audits typically focused on returns filed two or more years earlier. Beyond the obvious benefits of dealing with real-time information, tax professionals have noted that both the IRS and taxpayers have benefited from the earlier certainty of issue resolution under the CAP program.
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