Should Your Business Apply for the IRS' Compliance Assurance Process (CAP)?

The deadline to apply for the Internal Revenue Service’s (IRS) 2026 Compliance Assurance Process (CAP) program is October 31, 2025. The CAP program is one of several pre-filing programs that eligible businesses can use to avoid post-filing scrutiny from the IRS. Should your business apply for the CAP program? Here are some key insights from Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

Understanding the IRS’ CAP Program: Eligibility and Purpose

Submitting an application under the IRS’ CAP program is an option for eligible businesses that are seeking to avoid post-filing scrutiny from the IRS in 2026. As the IRS explains, eligible businesses can use the CAP program to obtain certainty regarding the IRS’s position on both: (i) pending transactions; and, (ii) tax positions they intend to take on their FY 2025 federal returns.

To qualify for the CAP program, a business must be a publicly traded corporation or privately held C-corporation, and it must have assets of $10 million or more. The business also must not be, “under investigation by, or in litigation with, any government agency that would limit IRS access to current tax records.” If you think that submitting a CAP program application may be a good option for your business, you should consult with an experienced Boston tax lawyer promptly.

Pre-Filing Alternatives to the CAP Program

Regardless of whether your business is eligible to file an application for the CAP program, you may also have a variety of other pre-filing options for avoiding (or at least mitigating) the risk of facing an IRS audit in 2026. These options 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

While each of these are options in different circumstances, they all provide opportunities for businesses to obtain guidance or an agreement from the IRS prior to filing their annual returns. Here too, an experienced Boston tax lawyer will be able to help you decide which option (if any) it makes sense to pursue based on your specific business-related tax concerns.  

Post-Filing Options for Resolving Potential Tax Controversies

What if you are concerned about facing an IRS audit related to your business’ past filings? In this scenario, an entirely different set of options is available. Some examples of the IRS’ post-filing resolution options include:

• Seeking an early referral to appeals or pursuing the rapid appeals process (RAP)
• Seeking a fast-track settlement (FTS)
• Seeking an accelerated issue resolution (AIR) agreement
• Using the IRS’ accelerated competent authority procedure (ACAP)
• Using the IRS’ mutual agreement procedure (MAP)

In some cases, business owners may need to consider a voluntary disclosure as well. Regardless of your specific concerns, if you are interested in pursuing a proactive resolution with the IRS, we invite you to contact us for more information.

Request a Call with Boston Tax Lawyer Kevin E. Thorn

To request a call with Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 617-692-2989 or contact us online. We will arrange a time for you to speak with Mr. Thorn in confidence as soon as possible.