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 C-corporation with a legal requirement to prepare and submit Forms 10-K, 10-Q, and 8-K to the Securities & Exchange Commission, or a U.S. privately held C-corporation, including foreign owned, that agrees to timely provide the IRS with unaudited quarterly financial statements and audited annual financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS) or another permissible method, as deemed appropriate by the IRS, or a partnership that was accepted into the CAP Program since 2020 and agrees to timely provide the IRS with unaudited quarterly financial statements and audited annual financial statements prepared in accordance with U.S. GAAP. The audited financial statements must be specific to the taxpayer applying to the CAP Program. As such, related entity and/ or parent audited financial statements will not be allowed; 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 in the CAP program, must not have more than one filed return and one unfiled return open on the first day of the CAP applicant's tax year; For new applicants to the CAP program, the applicant is eligible for participation in the program if the applicant has no more than three tax years open for examination on the first day of the CAP applicant’s tax year. The examination team would determine (and the accepted applicant would concur by signing the CAP MOU) that it is feasible these open years could close from the examination group no later than 12 months after the first day of the CAP applicant’s tax year if accepted. Note: For 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. Each return must be closed by the end of the second CAP year following the decision to examine or the applicant may not be eligible to participate in future CAP years. 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; Inflation Reduction Act (IRA) and Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act exception: Any return open due to an outstanding IRA and/or CHIPS tax issue; 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. 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 provide the Material Intercompany Transaction Templates (MITTs) or the Cross Border Activities Questionnaires (CBAQs) by the due dates or providing MITTs or CBAQs that are incomplete and/or do not adhere to the instructions; Failing to disclose a Schedule Uncertain Tax Positions (UTP) item, 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 MOU.
