IRS Opens Applications for the 2027 Compliance Assurance Process
Large eligible corporations can now apply to participate in the IRS CAP 2027 program.
The Internal Revenue Service (IRS) announced the opening of the application period for the 2027 Compliance Assurance Process (CAP), a program primarily aimed at large corporate taxpayers that allows them to identify and work on certain tax issues with the IRS before filing their tax return.
Applications to participate in CAP 2027 will be open from September 1 through October 30, 2026. The IRS plans to notify applicants in February 2027 whether they have been accepted into the program.
What is the Compliance Assurance Process (CAP)?
The Compliance Assurance Process is a program administered by the IRS Large Business and International (LB&I) division that seeks to improve tax compliance among large corporate taxpayers through a closer and more timely review of their tax matters.
Unlike the traditional process, where many issues may be reviewed after the tax return is filed, CAP uses a real-time tax issue resolution model. The company and the IRS work transparently and cooperatively to identify and analyze relevant tax issues before the corresponding tax return is filed.
The program began as a pilot in 2005 and became permanent in 2011. Its objective is for the IRS to achieve a reasonable level of certainty regarding the accuracy of the tax return and, when the process works as intended, significantly reduce the extent of post-filing reviews. It seeks to resolve potential tax issues before they become problems after the tax return is filed.
Why Can CAP Be Beneficial for Corporations?
The operations of a large corporation may involve complex transactions, different tax treatments, and, in some cases, international operations or transactions between related companies. Waiting until after the tax return is filed to resolve a significant difference can result in longer review processes and greater uncertainty.
By reviewing certain issues during the year, the company can obtain greater tax certainty before filing its tax return, while the IRS can identify relevant issues in advance and use its review resources more efficiently.
According to the IRS, the benefits of the program include resolving issues before filing the tax return, real-time review of transactions, greater tax certainty, savings in time and resources, and a reduced need to make certain subsequent modifications.
However, participating in CAP also requires a significant level of transparency, cooperation, and tax preparation. Participating companies must provide relevant information in a timely manner and actively work with the IRS throughout the process.
Who Can Apply to Participate in CAP 2027?
It is intended for large taxpayers that meet specific requirements. For the 2027 period, the IRS establishes that an applicant must have assets of $10 million or more and must not be under investigation or in litigation with the IRS or another government agency that could limit the IRS's access to current corporate tax records.
In addition, eligible entities include publicly traded U.S. C corporations that are required to file Forms 10-K, 10-Q, and 8-K with the SEC.
Privately held U.S. C corporations, including foreign-owned corporations, may also be eligible, provided they meet the applicable requirements. These include providing annual audited financial statements prepared under U.S. GAAP, IFRS, or another method accepted by the IRS, as well as unaudited quarterly financial statements. For these applicants, the audited financial statements must contain an unqualified audit opinion and meet the reconciliation requirements established by the program.
This makes the opening of CAP particularly relevant for certain private corporations and foreign-owned U.S. companies that meet the program's criteria.
What Happens After Entering the Program?
During the process, the corporation provides information about material transactions and tax issues while the IRS analyzes them. The objective is for both parties to work on these issues before it is time to file the tax return.
Once an issue has been fully disclosed during the pre-filing period, the IRS normally has 90 days to complete its review and determine whether it agrees or disagrees with the tax treatment, although additional time may be authorized when necessary.
After the tax return is filed, there is also a review to verify that the issues were reported in accordance with what was established during the process and to determine whether there are new items that were not previously disclosed.
CAP does not eliminate IRS oversight; it seeks to move a significant part of the compliance and resolution process to a point before the tax return is filed.
What Should I Keep in Mind for CAP 2027?
Interested companies should begin by determining whether they meet both the eligibility requirements and the conditions necessary to effectively participate in a process based on transparency and continuous review.
The CAP application also requires specific documentation. For new applicants, the package includes Form 14234 and various documents related to tax issues, intercompany transactions, tax controls, and international activities, as applicable.
October 30, 2026, is the deadline to apply for participation in CAP 2027, and the IRS will notify applicants of acceptance decisions in February 2027.
For a corporation considering participation, this means that the evaluation of eligibility, documentation, and internal preparation should be completed before approaching the end of the application period.
Jambrina CPA Can Help You
For large corporations, maintaining tax compliance requires much more than preparing a tax return at the end of the year. Programs such as the Compliance Assurance Process reflect the importance of having organized financial information, appropriate controls, and a tax strategy capable of anticipating relevant issues.
At Jambrina CPA, we help domestic and international companies understand their U.S. tax obligations, evaluate their compliance needs, and keep the information necessary to handle increasingly complex tax processes organized.
If your corporation meets the requirements for CAP 2027 or needs to evaluate how new IRS provisions may affect its obligations, our team can help you analyze its situation and prepare in advance.
Work with an Accountant in English and Spanish to maintain your company's tax compliance and develop an appropriate strategy for its U.S. operations.
The deadline to apply for participation in CAP 2027 is October 30, 2026.