The Internal Revenue Service said Thursday that it plans to expand a six-year-old pilot program for assuring large corporations are complying with their tax obligations and make it permanent.
The program is known as the Compliance Assurance Program, or CAP. Under CAP, participating taxpayers work collaboratively with an IRS team to identify and resolve potential tax issues before the tax return is filed each year. With the major potential tax issues largely settled before filing, taxpayers are generally subject to shorter and narrower post-filing examinations.
With the CAP program growing in popularity, it is being expanded to include two additional components. A new pre-CAP program will provide interested taxpayers with a clear roadmap of the steps required for gaining entry into the CAP program. A new CAP maintenance program is also being introduced. It is intended for taxpayers who have been in CAP, have fewer complex issues, and have established a track record of working cooperatively and transparently with the IRS.
“This marks another important step in our evolving relationship with corporate taxpayers,” IRS Commissioner Doug Shulman said in a statement. “Through greater cooperation and transparency, CAP taxpayers and the IRS both benefit.”
“CAP is a program where the tax system is at its best—when the taxpayer and the IRS are transparent and issues are resolved before a return is filed,” Shulman added.
Details of the permanent program, including the new pre-CAP program and CAP maintenance program, are included in a revision to the Internal Revenue Manual, a revised application and memorandums of understanding that corporations are required to submit to participate in pre-CAP and CAP.
The CAP pilot began in 2005 with 17 taxpayers. In fiscal year 2011, 140 taxpayers are participating in the program. Only taxpayers with assets of $10 million or more are eligible to participate.
For more information on the Compliance Assurance Process, visit the CAP page on IRS.gov.
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