Issues in the Compliance Assurance Process (CAP) are identified through a collaborative process between the taxpayer and the IRS. Initially, the taxpayer submits Form 14234-C, Taxpayer Initial Issues List, as part of the CAP application process. This form includes known or expected transactions for the upcoming CAP tax year. The taxpayer and the CAP team then work together to determine which of these preliminary issues will be included in the CAP review. As the CAP year progresses, the taxpayer is required to make contemporaneous disclosures of all additional material issues. Additionally, the IRS may identify issues for potential consideration based on the review of various sources of information, such as SEC filings.
The process involves real-time review of completed business transactions, with the necessary specialists, experts, and records available. The taxpayer must facilitate the participation of their knowledgeable employees in issue development and fully disclose and provide all pertinent information. Both the IRS and the taxpayer must agree that all relevant facts have been provided to ensure accurate issue identification and resolution.
Sources:
IRM Part 4. Examining Process. Chapter 50. LB&I Compliance Integration. Section 3. Large Corporate Compliance Program
IRM Part 4. Examining Process. Chapter 50. LB&I Compliance Integration. Section 2. Other Workload Selection and Research – Non-Campaign Compliance Programs
IRM Part 4. Examining Process. Chapter 46. LB&I Examination Process. Section 1. General Information and Definitions
IRM Part 4. Examining Process. Chapter 46. LB&I Examination Process. Section 5. Resolving the Examination
