2026 IRS Compliance Assurance Process (CAP) Application Window Closes October 31

The application window for the Internal Revenue Service’s (IRS) 2026 Compliance Assurance Process (CAP) program closes on October 31, 2025. Should your business apply before the deadline? Here are some key considerations from Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

Overview of the IRS’ Compliance Assurance Process (CAP)

The CAP program provides a means for eligible companies to proactively resolve potential federal tax controversies with the IRS before the April 15 filing deadline. As the IRS explains, the CAP program “employs real-time issue resolution through transparent and cooperative interaction between large corporate taxpayers and the IRS to improve federal tax compliance by resolving issues before filing . . . a tax return.”

To be eligible to apply, companies must meet three requirements:

• They must have assets of $10 million or more;
• They must be a publicly traded corporation or a privately held C-corporation; and,
• They must not be “under investigation by, or in litigation with, any government agency that would limit IRS access to current tax records.”

Companies can use the CAP program to both address specific tax positions prior to filing and obtain a “real-time” review of pending corporate transactions. For eligible companies that have concerns about facing IRS scrutiny in 2026, submitting an application under the CAP program could be a good option.

Alternate Pre-Filing Resolution Options for Large Corporate Taxpayers

While submitting an application under the CAP program is one potential option for avoiding IRS scrutiny post-filing, companies may have a variety of other options as well. Some examples of potential alternatives to submitting a CAP program application include:

• Requesting a private letter ruling (PLR)
• Requesting a determination letter
• Seeking to enter into a pre-filing agreement (PFA)
• Seeking to enter into an advance pricing agreement (APA)
• Using the IRS’ industry issue resolution (IIR) program

Each of these is an option under different circumstances, and each has its own eligibility criteria and filing requirements. For company owners and executives who have concerns about their company’s tax positions (or the risk of facing an IRS audit generally), it will be worth working closely with an experienced Boston tax lawyer to assess each of these options and determine which (if any) make sense to pursue under the circumstances at hand.

To be clear, all of these are options for companies that have concerns about facing IRS scrutiny related to tax positions they have taken (or are intending to take) during the current tax year. If you have concerns about facing scrutiny from the IRS related to your company’s past federal tax returns, it may be in your company’s best interests to consider alternative options such as negotiating a civil settlement or submitting a voluntary disclosure.

Discuss Your Company’s Options with Washington D.C. Tax Lawyer Kevin E. Thorn

If you have questions about applying for the IRS’ Compliance Assurance Process (CAP) program or pursuing other options for avoiding IRS scrutiny in 2026, we invite you to get in touch. To request a confidential consultation with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033 or contact us online today.