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August 25, 2021

LB&I accepting new applicants for 2022 CAP program

The IRS's Large Business and International division (LB&I) is currently accepting new applications for its Compliance Assurance Process (CAP) program for tax year 2022. The application period is September 1, 2021 through November 1, 2021. The IRS will notify accepted applicants in February 2022.

In general, the changes that were made for the 2021 CAP program remain for the 2022 CAP program.


CAP, a cooperative pre-filing program available to certain large taxpayers, began as a pilot program in 2005 and was made permanent in 2011. It is intended to allow the IRS and taxpayers to reach agreement on the treatment of various tax issues before a return is filed.

In September 2019, the IRS solicited applications for the 2020 CAP program. This was the first time the IRS had solicited CAP program applications since August 2016 (see Tax Alert 2019-1642). In September 2020, the IRS opened the application period for the 2021 CAP program and announced that it included modified open-year criteria, updated requirements for the Tax Compliance Framework (TCF) Questionnaire and a new Bridge Phase (see Tax Alert 2020-2180).

The CAP Program currently has three phases: (1) the CAP Phase (when the IRS and taxpayer resolve all or most tax positions before filing a tax return); (2) the Compliance Maintenance (CM) Phase (when the IRS, at its discretion, adjusts the level of review of the tax year based on the complexity and number of issues); and (3) the Bridge Phase (when the IRS will not accept any taxpayer disclosures, review any issues or provide any assurances).

Program eligibility

The general eligibility requirements for new applicants remain unchanged from last year's application. To be eligible for the 2022 CAP program, new applicants must: (1) have assets of $10 million or more; (2) be a US publicly-traded corporation that is legally required to submit SEC Forms 10-K, 10-Q and 8K; and (3) not be under investigation by, or in litigation with, the IRS or any other government agency that would limit the IRS's access to current tax records. Returning CAP participants that do not meet the second requirement may be grandfathered into the program if they commit to provide the IRS with financial statements prepared in accordance with US GAAP.

2021 changes continue to apply

For the 2022 CAP program, the following still applies for both new and returning CAP participants:

Open-year criteria

Applicants for the 2022 CAP program that are currently under examination can have up to two filed open returns and one unfiled open return.

For the 2020 CAP year, applicants under examination could not have more than one filed return and one unfiled return open on the first day of the applicant's CAP year. In recognition of the effects of the COVID-19 pandemic on taxpayers, the IRS allowed 2021 CAP program applicants to have two filed open returns. This modification continues for the 2022 CAP year but is expected to be eliminated for the 2023 CAP year.

Tax Compliance Framework (TCF) Questionnaire

For the 2022 CAP program, only new CAP applicants must submit the TCF Questionnaire with information about the applicant's tax governance processes and system of internal controls.

For the 2020 application period, all applicants were required — for the first time — to file a TCF Questionnaire. For the 2021 CAP program, only new CAP applicants were required to submit the TCF Questionnaire. For the 2022 CAP year, returning CAP participants will be required to submit an updated TCF Questionnaire only if there have been material changes, such as a major reorganization, being acquired or outsourcing any part of their tax function.

Bridge Phase

For the 2022 CAP year, applicants can remain in the Bridge Phase for no more than two consecutive years.

The Bridge Phase is reserved for taxpayers whose risk of noncompliance does not warrant the continual use of LB&I examination resources. For the 2022 CAP year, as in 2021, the taxpayer will return after two years to the CAP Phase or CM Phase for the subsequent tax year.


While the 2022 CAP program looks much the same as the 2021 version, the IRS indicated that it is open to reconsidering certain aspects of the program going forward. Of particular note to privately-held and foreign-owned taxpayers, the IRS stated that it "will continue to assess" the requirement for all new CAP program applicants to be publicly traded and legally required to submit SEC Forms 10-K, 10-Q and 8K, and "invites suggestions on viable alternatives." While non-publicly traded taxpayers could participate in the CAP program before it closed to new applicants in 2016, new applications were limited to SEC registrants after the program re-opened in 2019.

As in prior years, the timeline to submit CAP program applications is relatively tight, particularly in light of the information required on the Form 14234 application and related schedules. Interested taxpayers should take note of the November 1, 2021 deadline to ensure consideration for admission into the program.


Contact Information
For additional information concerning this Alert, please contact:
Tax Policy and Controversy
   • Bryon Christensen (
   • Kirsten Wielobob (
   • Melissa Wiley (