The CAP Program has three phases: the CAP Phase, the Compliance Maintenance (CM) Phase, and the Bridge Phase.
- CAP Phase: In this phase, the IRS and the taxpayer work contemporaneously to achieve compliance and certainty by resolving all or most tax positions prior to the filing of a tax return. The taxpayer proactively provides the IRS with pertinent facts to develop material issues. Transparency and cooperation are emphasized to reduce resource use for both the taxpayer and the IRS. Within 30 days of filing the return, the taxpayer must provide a Post-Filing Representation, signed by an officer with authority, stating that the filed return is consistent with pre-filing resolution agreements.
- Compliance Maintenance (CM) Phase: In this phase, the IRS adjusts the level of review based on the complexity and number of issues. The same MOU and criteria from the CAP Phase apply. Taxpayers must continue to make open, comprehensive, and contemporaneous disclosures of their completed business transactions. Eligibility for the CM Phase requires the taxpayer to have completed at least one CAP cycle through post-file, have an effective CAP process in place, and a history of timely concluding post-file examinations. Generally, taxpayers in this phase have a history of receiving full acceptance letters and have relatively few issues to be considered.
- Bridge Phase: This phase is not detailed in the provided information, but it is implied to be a transitional phase between the CAP Phase and the CM Phase, added to the program in 2019 when the program was revised.
Sources:
IRM Part 1. Organization, Finance, and Management. Chapter 1. Organization and Staffing. Section 24. Large Business and International Division
IRM Part 4. Examining Process. Chapter 60. International Procedures. Section 11. International Compliance Assurance Program
