The termination process in the Compliance Assurance Process (CAP) Program involves several steps to ensure that both the IRS and the taxpayer have the opportunity to resolve any issues before termination is finalized. Here is a detailed explanation of the process:
- Initial Attempt to Resolve Concerns: If either the taxpayer or the IRS is unable or has failed to comply with the responsibilities and obligations contained in the CAP Memorandum of Understanding (MOU), the parties will first attempt to resolve their concerns.
- Written Notice of IRS Concerns: If the concerns cannot be resolved, and the IRS determines that the taxpayer continues to fail to adhere to the terms of the MOU, the Territory Manager assigned to the case will issue a written notice of the IRS concerns to the taxpayer.
- 30-Day Resolution Period: The taxpayer has 30 days from the receipt of the written notice to resolve the stipulated concerns.
- Issuance of Termination Letter: If the concerns are not resolved within the 30-day period, the Director of Field Operations (DFO) assigned to the case will issue a Termination Letter to the taxpayer.
- Post-Termination Examination: Once the Termination Letter is issued, the taxpayer’s participation in the CAP Program will cease. The IRS may then conduct a traditional post-filing examination of the taxpayer’s return after it is filed.
This structured process ensures that the taxpayer is given ample opportunity to address any issues before termination from the CAP Program is finalized.
Sources:
Rev. Proc. 2023-17
IRM Part 4. Examining Process. Chapter 46. LB&I Examination Process. Section 4. Executing the Examination
Rev. Proc. 2023-18
IRM Part 8. Appeals. Chapter 20. Account and Processing Support (APS). Section 7. Closing Procedures
