Form 15349 – Exit or Decline CAP Program 2026

One of my corporate clients spent the better part of a quarter wrestling with a pending acquisition that intersected directly with open CAP positions – positions the IRS team was actively reviewing in real time. The confidentiality and strategic sensitivity of the deal made continued CAP transparency impractical, and we had to make the judgment call to file Form 15349 and exit the program mid-cycle. It was the right decision, but understanding exactly what we were walking away from and what it would take to get back in later required more planning than I initially expected.

Download Form 15349 PDF

Key Takeaways

Form 15349 is the formal election a corporation uses to decline CAP participation for a given tax year or to exit the program after previously having elected in with Form 15348.
Who files: Large corporations currently in or eligible for the CAP program that are voluntarily stepping back for strategic, operational, or legal reasons.
Timing matters: The best time to file Form 15349 is before a new CAP year begins – mid-year exits are possible but create complications for unresolved positions.
Key consequence: Unresolved positions that were under CAP review revert to the traditional post-filing examination cycle upon exit.
Exit is not permanent: A voluntary exit with Form 15349 does not permanently bar re-entry, but the IRS will evaluate the circumstances of the exit when reviewing any future Form 15348 application.
SOP tip: Document the strategic rationale for any CAP exit in writing at the time of filing – it becomes critical context if the corporation seeks re-entry in a future cycle.

What Form 15349 Is and When to Use It

Form 15349, titled “Election Not to Participate in or to Exit Compliance Assurance Process Program,” is the formal mechanism a large corporation uses to withdraw from or decline the IRS Compliance Assurance Process. It is the counterpart to Form 15348 – where Form 15348 opens the door to CAP, Form 15349 closes it.

There are two distinct scenarios where Form 15349 applies. The first is a declining scenario: a corporation that has been approved for CAP but decides, before the program year begins, that it does not want to participate for that specific year. The second is an exit scenario: a corporation that is already inside CAP and wants to formally end its participation mid-year or before a renewal cycle. Both uses follow the same form, but the implications differ significantly.

From my side of the desk, Form 15349 is rarely a routine filing. It usually signals a significant strategic shift – a merger, a litigation development, a change in corporate leadership that resets the organization’s IRS relationship posture, or simply an acknowledgment that the operational burden of CAP transparency is not sustainable for the current year. Whatever the reason, the decision to file should be deliberate and well-documented.

The Relationship Between Form 15349 and Form 15348

These two forms operate as a pair. Form 15348 elects a corporation into the CAP program. Form 15349 elects it out. A corporation that has filed Form 15348 and received confirmation of enrollment must file Form 15349 to formally exit – simply stopping communication with the IRS CAP team is not an adequate exit mechanism and can create compliance complications.

When the Decision to Exit Should Be Made

Ideally, the decision to exit or decline CAP is made before the start of the tax year in question. This allows the IRS to reassign resources and avoids the complication of mid-year unresolved positions. If circumstances arise mid-year that make continued participation impractical – such as a pending acquisition with M&A confidentiality concerns or a significant litigation development – mid-year exit is possible but should be coordinated directly with the assigned LB&I team before the form is filed.

How to Complete Form 15349

Form 15349 follows a similar structure to Form 15348. It collects identifying information and requires the corporation to indicate whether it is declining participation for a future year or exiting mid-year. A brief explanation of the reason for the election is typically expected.

Section / Field	What to Provide	Practitioner Tip
Taxpayer Name	Legal name of the corporation as it appears on Form 1120	Ensure exact match to avoid processing delays
EIN	Employer Identification Number	Double-check against the most recently filed return
Tax Year Affected	The year for which the corporation is electing not to participate or exiting	Be precise – specifying the wrong year creates administrative complications
Election Type	Check the applicable box: declining for a future year vs. mid-year exit	Mid-year exits require additional coordination with the LB&I team
Reason for Election	Brief explanation of why the corporation is declining or exiting	Be factual and concise; this explanation may be reviewed if the corporation seeks re-entry later
Authorized Signature	Officer signature with corporate authority	Same signing authority requirements as Form 15348

Supporting Documentation to Prepare

While Form 15349 does not require extensive attachments, it is good practice to prepare a brief internal memo documenting the strategic rationale for the exit decision, any open positions being transitioned back to the traditional examination cycle, and the anticipated timeline for any future re-election. This documentation protects both the corporation and your firm if questions arise later.

Filing Requirements and Timing

Form 15349 does not have a statutory filing deadline the way most IRS forms do. However, timing carries significant practical consequences.

Scenario	Recommended Timing	Key Risk of Delay
Declining before a new CAP year	Before the start of the tax year; coordinate with IRS enrollment window	If not declined before year starts, the corporation may be treated as participating
Mid-year exit from active CAP	As soon as the decision is made; coordinate with LB&I team before filing	Unresolved positions may be more difficult to close efficiently under traditional exam
Responding to IRS-initiated removal	N/A – IRS issues its own removal notice; Form 15349 not required from taxpayer	Cooperate with any transition process the IRS initiates

Submission Address

Like Form 15348, Form 15349 is submitted directly to the LB&I division and not through standard IRS service centers. The submission should go to the same LB&I contact that manages the corporation’s CAP engagement, or to the CAP program coordinator if the primary relationship manager has changed.

Strategic Reasons to Exit or Decline CAP

Understanding why corporations file Form 15349 helps practitioners advise clients before the decision is made. The most common strategic rationales I see in practice fall into several categories.

Mergers, Acquisitions, and Restructurings

The most common reason I see. CAP requires real-time disclosure of material transactions – but M&A activity often involves highly confidential information that the corporation is not prepared to share with the IRS until the deal closes or is publicly announced. A pending acquisition, a leveraged buyout, or a significant internal restructuring can make continued CAP transparency impractical from a confidentiality standpoint. The decision to exit should be made early enough that the IRS transition is managed professionally rather than reactively.

Significant Litigation Developments

If the corporation has entered Tax Court litigation on a position that intersects with active CAP review, the real-time IRS access built into CAP can create strategic complications. Legal counsel typically advises that the corporation exit CAP for the affected years while litigation is active. This is one of the few scenarios where mid-year exit may be unavoidable.

Resource Constraints and Operational Changes

CAP demands sustained internal resources – dedicated tax team time, regular IRS interaction, and high documentation standards throughout the year. Corporate restructurings, leadership transitions, or significant downsizing of the tax department can make meeting these obligations impractical. Rather than participate ineffectively, a voluntary exit through Form 15349 is the more professional approach.

Strategic Reassessment of the CAP Value Proposition

Not every corporation finds CAP worthwhile every year. If the corporation’s transaction complexity has decreased, the anticipated examination risk is lower, or leadership has decided that the traditional post-filing exam cycle is preferable for internal management reasons, a voluntary decline through Form 15349 is a legitimate strategic choice. There is no stigma in choosing not to participate – CAP is voluntary.

What Happens After You File Form 15349

The most important thing to understand after filing Form 15349 is what happens to any positions that were under CAP review at the time of exit.

Open Positions Revert to Traditional Examination

Positions that were being reviewed under CAP but were not yet resolved at the time of exit do not carry forward as “cleared.” The IRS CAP team will document the status of open issues, but those issues will be subject to post-filing examination under the standard cycle. The corporation should expect that unresolved CAP positions will resurface in a traditional exam – and should prepare documentation accordingly.

Resolved Positions Remain Closed

Any positions that the IRS had formally resolved and closed under CAP before the exit remain closed. The IRS does not reopen positions it has already resolved through the CAP process simply because the corporation subsequently exited the program. This is an important distinction – the value of whatever CAP work was completed before exit is not lost.

Communication With the LB&I Team

After Form 15349 is filed, expect the IRS LB&I team to schedule a transition conversation. They will want to understand the status of open matters, confirm which positions they consider resolved, and establish a protocol for any outstanding document requests. Participating constructively in this transition is important for maintaining a positive IRS relationship and protecting the corporation’s ability to re-enter CAP in the future.

Re-Entering CAP After an Exit

Many corporations that exit CAP through Form 15349 want to re-enter in a future year. Understanding the re-entry process is as important as understanding the exit process.

Re-Entry Is Not Automatic

A prior CAP participation record does not guarantee re-entry. The IRS evaluates each Form 15348 application on its own merits, and a history of exits – particularly mid-year exits or exits associated with non-cooperation – can weigh against approval. Voluntary exits for well-documented strategic reasons are generally treated more favorably than exits that appear to have been driven by non-cooperation with IRS requests.

Rebuilding the IRS Relationship Before Re-Applying

Quick rule you can copy into your SOP: if your client exits CAP through Form 15349, plan a minimum 12-month relationship maintenance period before filing Form 15348 again. This means responding promptly to any remaining examination requests from the exit year, maintaining clean compliance through the non-CAP year, and where appropriate, maintaining communication with the LB&I relationship manager to signal continued good-faith engagement.

The Re-Entry Application

Re-entry follows the same process as initial enrollment – the corporation submits Form 15348 during the applicable enrollment window. It is worth including a brief explanation of why the prior exit occurred and what has changed to make the corporation a strong CAP candidate again. Proactively addressing the IRS’s likely questions accelerates the review process.

IRS-Initiated Removal vs. Voluntary Exit

It is important to distinguish between a voluntary exit (Form 15349 filed by the corporation) and an IRS-initiated removal from the CAP program. These have different implications and different implications for future re-entry.

How IRS-Initiated Removal Works

If the IRS determines that a CAP participant is not meeting program requirements – failing to disclose material transactions, missing agreed submission deadlines, being unresponsive to IRS requests, or engaging in conduct inconsistent with the CAP framework – the IRS can remove the corporation from the program without the corporation filing Form 15349. The IRS issues its own program removal letter, and the corporation receives notice.

Consequences of an IRS-Initiated Removal

An IRS-initiated removal is more significant than a voluntary exit for future program eligibility. The IRS will scrutinize any future Form 15348 application from a previously removed participant and will want to see evidence that the behavior or conditions that led to removal have been corrected. Depending on the reason for removal, re-entry may be delayed by one or more cycles.

Proactive Exit Protects the Corporation

From my side of the desk, if a corporate client is struggling to meet CAP obligations, proactive exit through Form 15349 is almost always preferable to waiting for the IRS to initiate removal. A voluntary exit signals good-faith acknowledgment of the program constraints and preserves the relationship better than a removal action would.

Common Mistakes That Slow Things Down

Stopping CAP communication without filing Form 15349 – Simply going silent with the IRS team is not a valid exit. File the form and complete the transition properly.
Filing mid-year without coordinating with LB&I first – Mid-year exits should always be preceded by a conversation with the assigned IRS team to agree on transition protocols for open positions.
Failing to document the strategic rationale – The reason for the exit matters for future re-entry. Document it clearly at the time of filing, not retroactively.
Assuming resolved CAP positions will be reopened – Positions formally resolved under CAP remain closed even after exit. Not understanding this creates unnecessary concern among client executives.
Not preparing for post-exit examination – Open positions will revert to traditional exam. Update workpapers and document packages before exit so they are ready for a post-filing examination team.
Submitting to the wrong IRS address – Form 15349 goes to LB&I, the same channel used for Form 15348. Confirm the submission address before filing.
Waiting too long to file when M&A drives the exit – If a pending deal is the reason for exit, file Form 15349 before the deal creates maximum disclosure tension with the IRS team. Early action preserves the relationship.

Practical Checklists You Can Reuse

Copy these into your internal wiki or SOP.

Pre-Exit Decision Checklist

Identify and document the strategic reason for the exit decision
Review the list of all open CAP positions and assess which will revert to traditional exam
Confirm no IRS-initiated removal is already in process
Consult with legal counsel if litigation or M&A is driving the exit
Notify CFO and appropriate executives of the exit decision and its implications
Coordinate with LB&I team before filing Form 15349

Form 15349 Filing Checklist

Confirm legal name and EIN against the most recent Form 1120
Specify the correct tax year and election type (decline vs. exit)
Draft and review reason statement for conciseness and accuracy
Obtain authorized officer signature
Submit to LB&I through the appropriate channel
Retain a copy with submission confirmation in the permanent file

Post-Exit Transition Checklist

Participate in IRS transition conversation after Form 15349 is processed
Document which positions were formally resolved under CAP before exit
Update workpaper packages for all positions reverting to traditional exam
Respond promptly to any remaining IRS information requests from the exit year
Set a calendar reminder to evaluate re-entry eligibility for the following cycle
Maintain proactive LB&I relationship communication during the non-CAP year

For Accounting Firms – Keep Delivery Smooth While You Scale

Managing CAP entries and exits for large corporate clients requires a level of documentation discipline and IRS relationship coordination that most firms struggle to staff consistently, especially across multiple large clients simultaneously. Accountably supports CPA and accounting firms that serve large corporate taxpayers by providing structured offshore delivery capacity for the documentation-heavy work that CAP and post-CAP examination preparation demands.

We keep this mention brief on purpose, your process comes first.

FAQs About Form 15349

What is the difference between Form 15348 and Form 15349?

Form 15348 is used to elect into the IRS Compliance Assurance Process (CAP) program. Form 15349 is the counterpart – it is used to formally decline participation for a given year or to exit the program entirely. A corporation that has been in CAP but wants to step back for strategic or operational reasons would file Form 15349.

Does filing Form 15349 affect future CAP eligibility?

Voluntarily declining or exiting CAP does not permanently disqualify a corporation from re-entering the program. However, the IRS evaluates each re-application individually, and a history of exits or mid-year departures may factor into future enrollment decisions. The stronger the cooperation record during the exit process, the easier re-entry tends to be.

What happens to pending CAP issues if a corporation exits mid-year?

If a corporation exits CAP before the year is complete, unresolved issues revert to the traditional post-filing examination process. The IRS will not automatically close positions that were under CAP review if the program relationship ends. This is one of the key reasons to carefully time any exit decision – and to ensure workpapers are ready for a traditional exam team before the exit is completed.

Can the IRS force a corporation out of CAP without Form 15349?

Yes. The IRS retains authority to remove a corporation from CAP if it fails to meet transparency and cooperation requirements or if an IRS enforcement priority changes. In that case, the IRS issues its own removal notice – Form 15349 is not required from the taxpayer side for an IRS-initiated removal.

When should a corporation consider filing Form 15349?

Common reasons include a pending merger or acquisition creating confidentiality concerns, significant litigation intersecting with the IRS review process, resource constraints making CAP transparency obligations impractical, or a strategic decision to reduce mid-year IRS engagement during a period of corporate transition. Whatever the reason, the decision should be deliberate, documented, and ideally made before the affected tax year begins.

This article is educational, not tax advice. Rules change, and states differ. Confirm thresholds, deadlines, and elections against the current IRS instructions for your year and facts.