The Internal Revenue Service (IRS) has officially opened the application period for the 2026 Compliance Assurance Process (CAP), an important programme aimed at large U.S.-based corporations. Running from September 3 to October 31, 2025, this initiative offers businesses the opportunity to address potential tax issues proactively, ensuring smoother compliance.
Introduced in 2005, CAP fosters a transparent relationship between the IRS and corporations, allowing them to resolve tax matters before filing returns. The programme is designed to minimise the risk of disputes and streamline the tax process. For more details on CAP, information from sources like Futbolete can provide further insights into this development.
Who Can Apply for the CAP Programme?
To be eligible for the CAP, corporations must meet specific criteria set by the IRS. First, businesses must possess assets of $10 million or more. This asset requirement ensures that the programme targets large-scale corporations that impact the U.S. economy. Eligible businesses can either be publicly traded or privately held C corporations, including those with foreign ownership.
Moreover, applicants are required to submit audited financial statements. These statements must comply with one of the following standards: U.S. Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS), or another IRS-approved accounting method. These audited statements must include an unqualified audit opinion from an independent auditor, verifying the accuracy of the corporation’s financial status. For the IRS to accept them, these statements must specifically pertain to the taxpayer applying for the CAP programme—audited statements from parent companies or related entities will not be accepted.
Key Changes and Updates for the 2026 CAP Cycle
The 2026 CAP cycle introduces several important updates that broaden the scope of the programme and offer more flexibility. One of the key changes is the open year criteria. Applicants are allowed to submit only one open declaration and one unsubmitted open declaration on the first day of their fiscal year. However, exceptions exist, especially in cases where an Advance Pricing Agreement (APA) is still pending or when there is assistance from the Competent Authority to resolve international tax matters. This flexibility helps businesses navigate complex global tax regulations.
Another significant change is the impact of recent legislative reforms. The Inflation Reduction Act (IRA) and the CHIPS Act have introduced substantial changes to the tax landscape, including the Corporate Alternative Minimum Tax (CAMT), excise taxes on stock buybacks, and various clean energy credits. These provisions may extend review periods beyond the standard CAP deadlines for companies impacted by these new laws, allowing for the inclusion of unresolved tax issues related to these provisions.
For new applicants, the IRS requires that no more than three fiscal years remain open at the beginning of the applicant’s CAP fiscal year. The IRS examining team will assess whether it is feasible to close these open years within 12 months from the start of the CAP year to maintain eligibility.
The Benefits of the CAP Programme for Large Corporations
For large businesses, participating in the CAP programme offers numerous advantages. The proactive approach that CAP provides helps businesses resolve tax issues before they escalate into costly disputes. By working collaboratively with the IRS, corporations can avoid penalties and reduce the risk of future audits.
Furthermore, the programme allows companies to maintain a cooperative relationship with the IRS, providing ongoing insights and feedback regarding their tax filings. This cooperation is invaluable for ensuring that tax returns are in line with current laws and regulations, such as those introduced under the IRA and CHIPS Act.
Lastly, CAP’s role in early resolution of tax issues facilitates smoother financial planning and decision-making. By addressing potential tax concerns in advance, corporations can manage their compliance processes more efficiently, saving time and resources while mitigating risk.
