IRS set to open annual CAP program for big companies

The Internal Revenue Service is preparing to open the 2026 Compliance Assurance Process program application period for public companies with at least $10 million in assets.

The annual CAP program is scheduled to run this year from Sept. 3 to Oct. 31, 2025, and it comes at a time when the Trump administration and Republicans in Congress recently passed the One Big Beautiful Bill Act, which extends and expands tax breaks for large corporations.

If they're accepted into the program, the IRS said it will inform applicants in February 2026.

CAP originated 20 years ago, back in 2005, and boasts real-time issue resolution through cooperative interaction between large corporate taxpayers and the IRS to improve federal tax compliance by resolving potential issues before a tax return is filed.

To be eligible to apply for CAP, applicants need to meet the following requirements:

• Have assets of $10 million or more;
• Be a U.S. publicly traded corporation with a legal requirement to prepare and submit SEC Forms 10-K (annual report), 10-Q (quarterly report) and 8-K (current report) or a privately held C-corporation, including foreign-owned. Privately held applicants will be required to submit audited financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS) or another permissible method, as deemed appropriate by the IRS, specific to the taxpayer applying to the CAP program on an annual basis and unaudited financial quarterly statements. The audited financial statements must contain an unqualified audit opinion from an independent auditor. Additionally, the net income or loss per the audited financial statements must reconcile to the Schedule M-3 Line 4(a), worldwide consolidated net income (loss);
• Not be under investigation by, or in litigation with, any government agency that would limit IRS access to current tax records.

For the 2026 CAP cycle, the IRS is continuing the open year eligibility criteria of allowing only one open filed return and one open unfiled return on the first day of the CAP applicant's tax year. There are several exceptions to this requirement, however, such as pending Advance Pricing Agreement resolution or Competent Authority Assistance, two other programs for large corporate taxpayers.

The IRS also pointed to several other highlights and updates on the CAP program for 2026, including updates on audited financial statement requirements. General program information and the 2026 application details are available on the CAP webpage.   

The Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act added several new provisions to the Tax Code for large corporate taxpayers, including the Corporate Alternative Minimum Tax, the excise tax on stock buybacks, and several clean energy credits, which will require a review for impacted taxpayers. Sine these reviews may initially extend beyond the CAP timelines, the IRS has added an exception to the closed/open year eligibility requirement, such that a tax year that remains open only because of an outstanding IRA and/or CHIPS Act tax issue will not be counted as an open filed return on the first day of the applicant's CAP year for purposes of the CAP Eligibility return criterion.

For a new applicant currently under examination to be eligible for participation in the program, the applicant can have no more than three tax years open for examination on the first day of the CAP applicant's tax year. The IRS examination team would determine if it is feasible these open years could close from the examination group no later than 12 months after the first day of the CAP applicant's tax year for continued eligibility (and the accepted applicant would then concur by signing the CAP MOU).

For the 2026 CAP cycle, the IRS is continuing to use the expanded criteria announced last year. In addition to considering publicly held C corporations, the IRS said it would accept applications from privately held C corporations, including foreign owned. Privately held applicants will be required to submit audited financial statements prepared in accordance with U.S. GAAP, International Financial Reporting Standards or another permissible method, as deemed appropriate by the IRS. The audited financial statements need to be specific to the taxpayer applying to the CAP program. As such, related entity and/or parent audited financial statements will not be allowed. The audited financial statements have to contain an unqualified audit opinion from an independent auditor. In addition, the net income or loss per the audited financial statements must reconcile to the Schedule M-3 Line 4(a), worldwide consolidated net income (loss).

Also for large corporate taxpayers, the IRS announced last month that it's proposing to streamline the examination process to reduce the time spent on cases.