Highlights and updates for the CAP 2027 application period

The IRS is not announcing any substantive changes to the Compliance Assurance Process (CAP) application requirements or eligibility criteria for the 2027 application period. Taxpayers should continue to follow procedures and requirements outlined in IRS.gov.

The following items remain in effect for the 2027 application period:

Open year criteria – Returning applicants must continue to meet the CAP open year eligibility requirement, which generally allows no more than one open filed return and one open unfiled return on the first day of the applicant's CAP tax year, subject to the existing exceptions (e.g., pending Advance Pricing Agreement resolution, Competent Authority Assistance, or other approved exceptions).

Inflation Reduction Act (IRA) and Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act – The existing exception to the closed/open year eligibility requirement for certain outstanding IRA or CHIPS Act tax issues remains in effect. A tax year that remains open solely because of an outstanding IRA or CHIPS Act tax issue will not be counted as an open filed return for purposes of the CAP Eligibility return criteria.

Eligibility criteria for new applicants – New applicants currently under examination remain eligible to apply provided they have no more than three tax years open for examination on the first day of the applicant's CAP tax year. Examination teams will continue to determine whether those open years can reasonably be closed from the examination group within 12 months after the first day of the CAP tax year. Accepted applicants will acknowledge this requirement by executing the CAP Memorandum of Understanding (MOU).

Eligibility criteria for publicly held and privately held applicants – Eligibility continues to include both publicly held C corporations and privately held C corporations, including foreign-owned corporations. Privately held applicants must continue to provide audited financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS) or another IRS-approved method. The audited financial statements must: 

• Be specific to the taxpayer applying to the CAP program. Related entity or parent audited financial statements will not be allowed. 
• Contain an unqualified audit opinion from an independent auditor. 
• Reconcile net income or loss to the Schedule M-3 Line 4(a), worldwide consolidated net income (loss).