WASHINGTON — The Internal Revenue Service announced changes to the Bridge phase of the Compliance Assurance Process (CAP) program. CAP is a cooperative pre-filing program for large corporate taxpayers.
The CAP program began in 2005 as a way to resolve tax issues through open, cooperative and transparent interactions between the IRS and taxpayers before the filing of a return.
The IRS made significant changes to the program in 2019 to improve its operation and to ensure the best use of limited government resources. One outcome of this change was the development of the Bridge phase in CAP, which is reserved for taxpayers whose risk of noncompliance does not support the continued use of IRS compliance resources.
During the Bridge phase, the IRS will not accept any disclosures, conduct any reviews or provide any assurances. In the three years since its inception, the IRS has received consistent feedback from taxpayers that participation in the Bridge phase deprives them of the most important aspect of CAP – the review by the IRS.
Due to this feedback, the IRS has developed a new pilot phase called “Bridge Plus.” Taxpayers will be required to provide book-to-tax reconciliations, credit utilization and other supporting documentation shortly after their audited financial statement is finalized. An IRS team will risk-assess the documents to determine if the taxpayer is suitable for the Bridge Plus phase.