CAP Eligibility and Suitability Criteria


To be eligible for participation in the CAP Program, a taxpayer must meet the following criteria:

  • Have assets of $10 million or more;
  • Be a U.S. publicly traded corporation with a legal requirement to prepare and submit Forms 10-K, 10-Q, and 8-K to the Securities & Exchange Commission or an entity that was accepted into the 2019 CAP Program and agree to provide the IRS with quarterly financial statements and audited annual financial statements for the entity that was accepted into the Program.
  • Not be under investigation by, or in litigation with, the IRS or another government agency that would limit the IRS’ access to current corporate tax records; and
  • If currently under examination, must not have more than one filed return and one unfiled return open on the first day of the applicant’s CAP year.

A return is treated as closed for purposes of the return criterion if it has been ‘closed in examination’ or qualifies for one or more of the following exceptions:

  • Previously Closed Exception: Any previously closed return that has been reopened to process a claim or other adjustment;
  • LB&I Suspense Exception: Any return that has been placed in LB&I Suspense for a TEFRA Linkage, Advance Pricing Agreement, Competent Authority Assistance, or Fast Track Settlement;
  • National Office Exception: Any return that is waiting for the National Office to issue published guidance or a ruling, such as Chief Counsel Advice (CCA), Private Letter Ruling (PLR), or Change in Accounting Method (CAM) Review;
  • JCT Review Exception: Any return that has been sent to the Joint Committee of Taxation (JCT) for review;
  • Closed from Group Exception: Any return that has been closed from group and sent to Technical Services, Centralized Case Processing, or Appeals; and
  • 2017 § 965 Exception: Any 2017 return with an IRC § 965 income inclusion that remains open only because of the income inclusion issue. This exception does not apply to any 2017 return that would have remained open for any other issue.

For a new applicant currently under examination to be eligible for participation in the CAP Program, the current cycle must be closed and the subsequent cycle not started on the first day of the applicant’s CAP year.

For all new applicants, any unexamined return with an open statute will be risk assessed as part of the required compliance check for the first CAP year. If the examination team determines that a material issue should be examined, the return with that issue may be placed under examination. Any unexamined returns that are placed under examination will be treated as ‘one filed’ return for purposes of the return criterion. These returns must be closed by the end of the second CAP year or the applicant may not be eligible to participate in the third CAP year.

Since the CAP Program is based on the transparent and cooperative interaction between the taxpayer and the IRS, a taxpayer that does not exhibit this type of behavior is not suitable for the Program.

Examples of significant or material failures to exhibit transparent and cooperative behavior include:

  • Not adhering to IDR response times or providing incomplete responses,
  • Not engaging in meaningful or good faith issue resolution discussions,
  • Failing to thoroughly disclose a material issue in a timely manner,
  • Failing to disclose a tax shelter or listed transaction,
  • Failing to disclose an investigation or litigation that limits IRS access to current corporate records,
  • Frequently filing claims or requesting appeals, and
  • Not adhering to the terms of the CAP Program.