The Tax Times: IRS CAP Real-Time Biz Audit Program Now Open to Private Companies

Monday, August 19, 2024

IRS CAP Real-Time Biz Audit Program Now Open to Private Companies

The Internal Revenue Service is opening its compliance assurance process real-time audit program to privately held C corporations, including foreign-owned ones, for 2025, the agency announced on August 15, 2024 in IR-2024-211,

The Internal Revenue Service today announced the opening of the application period for the 2025 Compliance Assurance Process (CAP) program, which will run from Sept. 4 to Oct. 31, 2024.

The IRS will inform applicants if they’re accepted into the program in February 2025.

Launched in 2005, CAP employs real-time issue resolution through transparent and cooperative interaction between taxpayers and the IRS to improve federal tax compliance by resolving issues prior to the filing of a tax return.

To be eligible to apply for CAP, applicants must:

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, 10-Q and 8-K 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 statements on a quarterly basis.

Not be under investigation by, or in litigation with, any government agency that would limit the IRS’s access to current tax records.

See highlights and updates for detailed information on revisions to the CAP program for 2025, including updates on Bridge Plus, an expansion of the applicant eligibility criteria, a new eligibility exception and a new form for international issues. General program information and the 2025 application details are available on the CAP webpage.

Privately held C corporations that apply will have to furnish audited financial statements, and related-entity or parent-audited statements won't be acceptable, the IRS said.

The agency also said Thursday that new applicants for the 2025 program will have to submit the Form 14234-E cross border activities questionnaire with their application. Returning applicants are directed to file it 90 days after the end of the prior tax year and simultaneously with filing tax returns, the IRS said.

The IRS also said it will add a new exception to the closed/open year eligibility rule because of Inflation Reduction Act provisions. A tax year staying open solely because of an outstanding Inflation Reduction Act issue won't be deemed an open-filed return on the first day of an applicant's CAP year for purposes of program eligibility standards for returns, the agency said Thursday. President Joe Biden signed the tax and climate act into law in 2022.

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