Today, modifications to the Compliance Assurance Process (CAP) program’s Bridge phase were made public by the Federal Revenue Service. For big company taxpayers, the CAP is a cooperative pre-filing scheme.
The CAP program was launched in 2005 as a mechanism for the IRS and taxpayers to communicate openly, amicably, and transparently in order to settle tax difficulties prior to the filing of a return.
In order to enhance the program’s functionality and guarantee the best possible use of the few government resources, the IRS made substantial improvements to it in 2019. The creation of the Bridge phase under CAP, which is only for taxpayers whose risk of noncompliance does not warrant the continuous use of IRS compliance resources, was one result of this shift.
The IRS won’t accept any disclosures, do any reviews, or offer any guarantees during the Bridge period. Since the program’s start three years ago, taxpayers have consistently told the IRS that taking part in the Bridge phase deprives them of the IRS review, which is the most crucial component of CAP.
The IRS has created a new pilot programme called “Bridge Plus” in response to this input. Shortly after the completion of the taxpayer’s audited financial statement, the taxpayer will be expected to submit book-to-tax reconciliations, credit usage, and other supporting data. If the individual qualifies for the Bridge Plus phase, an IRS team will risk-evaluate the documents.
Taxpayers who are approved for this new phase must submit a draught return 30 days prior to filing. While comparing the return to the taxpayer’s earlier submission, the IRS team will look for consistency. The taxpayer will be told to file a return if the draught return is accurate. An official letter of approval will be sent to the taxpayer if the submitted return is consistent with earlier submissions.
Only CAP members who participated in the Bridge phase for 2022 and were advised to do so again in 2023 will be eligible for the pilot. Input from several IRS Large Business & International practise areas as well as the low-risk conclusion will be used to determine acceptance into the programme.
In keeping with its original intent, CAP is a voluntary procedure in which qualified taxpayers’ consent to interact with the government in an open, transparent, and cooperative manner. Bridge Plus is dependent on a system of prompt replies, cooperation, and complete transparency. If CAP taxpayers qualify to take part in the pilot, the IRS will let them know.
(Source Credit: This article was originally published by irs.gov : news on February 13th, 2023.)