Large corporations interested in resolving federal tax issues with the IRS before filing their returns have a limited window to apply for a program designed to do exactly that. The Internal Revenue Service announced on September 8 that it is accepting applications for the 2027 Compliance Assurance Process, commonly known as CAP. The application period runs through October 30, 2026, and the IRS expects to notify applicants in February 2027 about whether they have been accepted. Unlike a traditional IRS examination that occurs after a tax return has been filed, CAP is built around identifying and resolving potential tax issues in real time.
What the IRS Compliance Assurance Process Does
The IRS Large Business and International Division launched CAP as a pilot program in 2005, and the program became permanent in 2011. According to the IRS Compliance Assurance Process overview, participating taxpayers work with the agency to identify and resolve tax issues before filing their returns. The approach is intended to increase return accuracy, provide taxpayers with greater certainty about their tax positions, and reduce the need for extensive post-filing examinations.
That doesn’t mean participating companies receive a pass on IRS scrutiny.
CAP relies on what the agency describes as transparent and cooperative interaction between the taxpayer and the IRS. Companies must make timely disclosures, respond to information requests, and work with the agency to resolve material tax issues. Participation is also something taxpayers must apply for each year.
Not Every Corporation Can Apply
The program is aimed at large corporate taxpayers, and the IRS eligibility requirements set a significant financial threshold. Applicants generally must have assets of at least $10 million and cannot be under an investigation or involved in litigation with the IRS or another government agency if the situation would limit the IRS’s access to current corporate tax records.
Eligible taxpayers include U.S. publicly traded C corporations required to file Forms 10-K, 10-Q, and 8-K with the Securities and Exchange Commission. Qualifying privately held C corporations, including foreign-owned corporations, may also participate. Those companies must meet financial-statement requirements, including providing audited annual financial statements and unaudited quarterly statements. The IRS expanded CAP eligibility to privately held U.S. C corporations beginning with the 2026 program year.
New and Returning Applicants Face Different Requirements
The application isn’t identical for every corporation. The IRS application and selection guidance shows that both new and returning applicants must submit Form 14234, the CAP application, along with several other required documents. New applicants have additional requirements, including a Material Intercompany Transactions Template, Tax Control Framework Questionnaire, and Cross Border Activities Questionnaire. Open tax years can also affect eligibility.
Current CAP participants generally cannot have more than one filed return and one unfiled return open on the first day of the applicant’s CAP tax year, although the IRS provides several exceptions. New applicants may have up to three tax years open for examination on the first day of their CAP tax year. However, the examination team must determine that those years can reasonably be closed within 12 months after the first day of the CAP tax year.
The IRS says it is making no substantive changes to CAP application requirements or eligibility criteria for the 2027 application period.
October 30 Is the Key Date for Interested Corporations
Corporations considering CAP participation have until October 30, 2026, to submit their applications. Returning applicants submit their application to their assigned account coordinator or case manager. New applicants are instructed to email their application to the IRS CAP program mailbox using “CAP Application” and the applicable tax year in the subject line.
Companies accepted into the program will receive a CAP Memorandum of Understanding that must be signed and returned to secure participation.
For corporate tax departments and advisors working with businesses that meet the $10 million asset threshold, the approaching deadline provides a reason to review eligibility now rather than waiting until late October. Because CAP requires extensive cooperation and disclosure but can provide greater certainty about tax positions before a return is filed, companies should evaluate whether that tradeoff fits their tax compliance strategy before applying.
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Amanda Blankenship is the Chief Editor for District Media. With a BA in journalism from Wingate University, she frequently writes for a handful of websites and loves to share her own personal finance story with others. When she isn’t typing away at her desk, she enjoys spending time with her daughter, son, husband, and dog. During her free time, you’re likely to find her with her nose in a book, hiking, or playing RPG video games.