After reading the Compliance Assurance Process (CAP) article, I believe this process which started
in the pilot program in 2005 and became permanent in 2011 helped many companies and business
owners with the correct way to prepare for tax audits till this current day. b The CAP gives the IRS
and the Large Business & International taxpayers methods through open communication to identify
and resolve tax issues that can be across the board with certain tax issues. b Having this informative
information for a business is crucial. b The program helps the business and the IRS to develop and
resolve material issues before the return is filed. b Having this dune in real time, I believe saves
auditing dollars that the IRS would have to use spending the time to readjust the tax return to the
correct tax liability and it gives the Large and international taxpayer the ability to pay the correct
tax when filing and would have to rethink how the transaction or expenses were reported. b
This program benefits the taxpayer 100%. b Even if there are issues that would result in the
taxpayer having to incur a higher tax liability, this is still beneficial to the taxpayer. b I believe it is
like having the CPA reviewer of the exams in with you while taking the CPA exam. b Who would not
want that. b Now the only issue I have with it is that the IRS is not in the business to make money
or give money away. b The IRS is there to collect the money that the government is due and to
refund the taxpayers who overpaid. b If I would like to suggest how the IRS could monetize this
process, I would say something like the how we have different tax brackets. b The IRS would charge
this fee based on the Gross income of the business and the more money you make the higher the
fee is because the fee percentage bracket would be higher. b This fee could be a flat fee and no
additional charges would be included. b I believe many large businesses would sign-up for this
program to know that they would not have to think about an audit in the future and most of the
material issues would have been resolved.
The compliance assurance process which provides businesses with a continuous real-time audio
system to prevent them from having to go back a few years to find information (Sawyers, 2021).
These processes are real-time resolution tools and techniques, resolve issues before filing tax
returns and comply with federal tax laws, ensure accurate tax returns, and shorten the IRS audit
process (IRS.gov, 2018). To be eligible for the program taxpayers must have 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
2022 CAP Program and agrees to provide the IRS with quarterly financial statements and audited
annual financial statements prepared in accordance with US GAAP 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 in the CAP program, must not have more than one filed return and one unfiled return
open on the first day of the applicant's CAP 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
applicant’s CAP year, and the examination team determines (with concurrence from the applicant)
that these open years will close from the examination group no later than 12 months after the first
day of the applicant’s CAP year if accepted. b 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 a '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. (IRS.gov, 2018)
What the IRS could do other than whatever they want to do, to keep this program is to monetize
it. For instance, charge each company a percentage of the cost that it is going to be each year
since they will know in advance because they limit the companies and only except the ones they
want. Or they could break it down to each company’s size and charge that way to make it fair but
let us face it when has the IRS ever cared about being fair? Programs like these that work always
seem to fall to the side for some reason with the government it seems like they would rather burn
a million than spend a hundred thousand on something that works or helps things get done easier.
Just a side note I have been helping or trying to help my brother on his audit for this year’s return
he claimed his son as a dependent his child, not a child the auditor sent him a message that states
he cannot be claimed, and cannot use him as head of household. I looked up the rule and sent it
to my brother he sent it in the IRS sent him a late notice. Not even willing to look I guess although
on the first attempt, they took two extra months. What that says to me is their time is more
valuable and they are smarter than everyone else is. My meaning is they need to come up with
some type of program like this for everyone.
References
IRS.gov. (2018). Compliance Assurance Process. Retrieved from irs.gov:
https://www.irs.gov/businesses/corporations/compliance-assurance-process
Sawyers, R. G. (2021). Federal Tax Research. Retrieved from McGraw Hill.com:
https://mbsdirect.vitalsource.com/reader/books/9780357366448/pageid/1
Internal Revenue Service. (2020, April 20). 4.51.8 compliance assurance process (CAP)
examinations: Internal Revenue Service. 4.51.8 Compliance Assurance Process (CAP) Examinations
| Internal Revenue Service. https://www.irs.gov/irm/part4/irm_04-051-008
