IRS Compliance Assurance Process Program Changes Coming

IRS Advisory Council

IRS Compliance Assurance Process Program Changes Coming

The CAP program was launched in 2005 as a way for the IRS and taxpayers to communicate openly, amicably, and transparently in order to resolve tax issues prior to the filing of a return.

The Compliance Assurance Process (CAP) program’s Bridge phase has undergone changes as announced by the Internal Revenue Service. For large corporate taxpayers, the CAP is a cooperative pre-filing program.

The CAP program was launched in 2005 as a way for the IRS and taxpayers to communicate openly, amicably, and transparently in order to resolve tax issues prior to the filing of a return.

In order to enhance the program’s functionality and guarantee the best possible use of scarce government resources, the IRS made significant changes to it in 2019. The creation of the Bridge phase in CAP, which is only for taxpayers whose risk of noncompliance does not support the continued use of IRS compliance resources, was one result of this change.

The IRS won’t accept any disclosures, perform any reviews, or offer any assurances during the Bridge phase. Since the program’s inception three years ago, taxpayers have consistently told the IRS that taking part in the Bridge phase deprives them of the IRS review, which is the most crucial component of CAP.

The IRS has created a new pilot program called “Bridge Plus” in response to this feedback. Shortly after the completion of the taxpayer’s audited financial statement, the taxpayer will be required to submit book-to-tax reconciliations, credit utilization, and other supporting documentation. If the taxpayer qualifies for the Bridge Plus phase, an IRS team will risk-evaluate the documents.

Taxpayers who are approved for this new phase must submit a draught return 30 days prior to filing. When comparing the return to the taxpayer’s earlier submission, the IRS team will look for consistency. The taxpayer will be told to file a return if the draught return is accurate. An official letter of acceptance will be sent to the taxpayer if the filed return is consistent with earlier submissions.

Only CAP participants who participated in the Bridge phase for 2022 and were advised to do so again in 2023 will be eligible for the pilot. Input from various IRS Large Business & International practice areas as well as the low-risk conclusion will be used to determine acceptance into the program.

In keeping with its original intent, CAP is a voluntary process in which eligible taxpayers consent to interact with the government in an open, transparent, and cooperative manner. Bridge Plus is dependent on a framework of prompt responses, cooperation, and complete transparency. If CAP taxpayers qualify to take part in the pilot, the IRS will let them know.

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[…] The CAP program was launched in 2005 as a way for the IRS and taxpayers to communicate openly, amicably, and transparently in order to resolve tax issues prior to the filing of a return. The Compliance Assurance Process (CAP  […]

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