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The Compliance Assurance Process Program

TaxReport

The Compliance Assurance Process (CAP) program is a cooperative pre-filing program that was created in 2005 as a way to help taxpayers resolve tax issues before filing their returns. The IRS recently instituted some major changes to the program, which will go into effect in 2019. However, to help affected taxpayers assess and implement the new changes, the IRS has shifted the application period from October 1st to November 30th of this year. If you want to learn more about the CAP program and whether it could help you with your own tax return preparation and filing, you should consider consulting with an experienced Florida tax preparation attorney who can advise you.

What is the CAP Program? 

The Compliance Assurance Process program was launched 13 years ago to help:

  • Clarify certain tax return-related issues for large corporate taxpayers before they are required to file their returns;
  • Reduce the chance of disagreement with the IRS; and
  • Cut down on lengthy examinations.

To achieve these goals, the IRS created three CAP program phases, which are known as:

  • The pre-CAP phase, which provides taxpayers with clear guidance on the steps required to gain entry into the program;
  • The CAP phase, which involves actual communications with the IRS regarding complex tax issues; and
  • The Compliance Maintenance phase, which is available to CAP-eligible taxpayers who have fewer issues and a track record of working cooperatively with the IRS.

Only certain taxpayers are eligible to take part in this program. This includes taxpayers who have assets of at least $10 million, are either a publicly or privately-held company, and are not under investigation by the IRS or a federal or state agency.

Recent Changes  

The IRS recently announced that it would be making a series of important changes to the CAP program. For instance, CAP program applicants are now required to provide a preliminary list of material issues, as well as specific transfer pricing and research credit information. This list will then be used to determine the tax-related issues that will be reviewed and can help determine how resources will be allocated in the case. Other important changes include the following:

  • The 2019 application period for existing CAP taxpayers will begin on October 1st of this year;
  • Taxpayers will need to provide a representation letter no later than 30 days after filing a return; and
  • Certain taxpayers who are involved in the Compliance Maintenance phase can continue in the program without review for a particular year.

The IRS also plans on making additional changes in the future, including the expansion of the program to make it available to more taxpayers.

Contact Our Legal Team  

The CAP program has proven to be helpful to many taxpayers when it comes to identifying and resolving issues prior to filing a tax return and helping taxpayers avoid filing amended state tax returns. To find out whether your company is eligible to take part in this program please call dedicated Florida tax return preparation attorney Ronald Cutler, P.A. at 386-490-9949. Initial one-on-one case evaluations are offered free of charge, so please don’t hesitate to call or contact us online today.

Resources:

irs.gov/businesses/corporations/compliance-assurance-process

accountingtoday.com/news/irs-changes-cap-program-for-large-corporate-taxpayers