The IRS’ Pre-Filing Agreement Program: What Businesses and International Taxpayers Need to Know

On June 17, 2025, the Internal Revenue Service (IRS) announced that it was making various improvements to its Pre-Filing Agreement program for large businesses and international taxpayers. According to the announcement, these improvements reflect “a renewed commitment by the IRS to expand access to cooperative tax compliance strategies that prevent disputes before they arise.” For large businesses and international taxpayers, disputes with the IRS can present substantial risks, and, as a result, leveraging the Pre-Filing Agreement program can be an effective strategy in many cases. Learn more from Texas tax defense lawyer Lawrence Brown:

What is the IRS’ Pre-Filing Agreement Program?

The IRS describes the Pre-Filing Agreement program as “a proactive tool available to taxpayers within the jurisdiction of the IRS’ Large Business and International division (LB&I). . . . [that] allows LB&I taxpayers to resolve potential tax issues before filing their return.” The Pre-Filing Agreement program is specifically intended for proactively resolving substantial tax controversies, as it has a user fee of $181,500.

If the IRS accepts an issue for resolution through the Pre-Filing Agreement program, it will work with the taxpayer to achieve a mutually agreeable resolution that allows the taxpayer to file its return without the risk of triggering an invasive audit or high-stakes investigation. It is worth noting, however, that the Pre-Filing Agreement program is just one of several potential options for resolving disputes that fall within the LB&I division’s jurisdiction. As a result, before submitting a Pre-Filing Agreement request or requesting a pre-submission conference with the IRS, large business and international taxpayers will want to work with their tax counsel to ensure that this is the best option under the circumstances at hand.

“Likely Suitable Issues” Under the Pre-Filing Agreement Program

One of the improvements that the IRS announced on June 17, 2025, was the launch of a new page on its website devoted to identifying “likely suitable issues” under the Pre-Filing Agreement program. Broadly, the program is intended to resolve outstanding issues related to items “that will be filed on a return.” As the IRS explains, the program is not a tool for seeking guidance on “hypothetical scenarios, incomplete transactions . . . [or] the tax treatment of prospective or future transactions or events.”

Currently, the “likely suitable issues” listed on the IRS’ website are:

• IRC 41 research credits and IRC 174 amortization of specified research and experimental expenditures (SRE)
• Deductions for worthless securities under IRC 165(g)
• Application of the IRC 249 limitations on the repurchase premium on convertible debt
• Discount rates and costs of required capital for the valuation of insurance companies
• Accounting for construction and manufacturing contracts as long-term contracts under IRC 460
• Identification of qualified business units (QBUs) under IRC 989(a)
• Determining whether a taxpayer is “engaged in a trade or business within the United States”
• Calculating gross income “effectively connected” with a taxpayer’s trade or business within the United States
• Calculating deductions from income that is effectively connected with a taxpayer’s trade or business within the United States
• “Permanent establishment” determinations under bilateral income tax conventions

The IRS emphasizes that these are likely suitable issues under the Pre-Filing Agreement program—and that acceptance of an issue under the program is not guaranteed. The IRS reserves the right to deny Pre-Filing Agreement requests, and it notes that the current acceptance rate is approximately 67 percent.

Requesting a Pre-Filing Agreement (or Pre-Submission Conference)

As with all aspects of federal tax compliance, requesting a Pre-Filing Agreement involves following a stringent set of rules and procedures established under the IRS’ rules and regulations. Additionally, the IRS recommends submitting a request for a Pre-Filing Agreement within 60 days of completing the transaction at issue or within 30 days of the close of the relevant tax year, whichever comes first.

Large business and international taxpayers have two options for starting the process—they can either: (i) submit a Pre-Filing Agreement request in accordance with Revenue Procedure 2016-30; or (ii) request a pre-submission conference. As the IRS explains, requesting a pre-submission conference, “gives [taxpayers] a chance to present the issue in question and determine if submitting a formal request makes sense.”

The IRS’s website states that it usually makes a final decision on Pre-Filing Agreement requests within 60 days. However, in recommending prompt submission, the IRS also notes that, “early submission gives the IRS 8 to 9 months to review, develop, and finalize the agreement.”

Alternatives to Requesting a Pre-Filing Agreement

While requesting a Pre-Filing Agreement is one way that large businesses and international taxpayers can proactively resolve complex tax issues with the IRS, this is not the only option that is available. Additionally, as noted above, seeking a Pre-Filing Agreement is not an option in all cases—it is specifically (and exclusively) an option for resolving issues related to transactions and events that have already transpired.

In appropriate cases, the IRS encourages large business and international taxpayers to consider other proactive options for resolving (or avoiding) high-stakes tax controversies as well.

One of these options is requesting a private letter ruling (PLR) from the Office of Chief Counsel. The PLR program has a user fee of $30,000, and it allows eligible taxpayers to seek a determination of the IRS’s tax treatment of a specific situation. Another option is to request a determination letter from the IRS Director, which serves as an agreement on the tax treatment of a specific transaction.

There are other options as well, and when facing potential high-stakes tax controversies, large business and international taxpayers should carefully consider all of the options they have available. Facing an audit or investigation can be far more expensive, and, regardless of the circumstances at hand, there is no guarantee that defending against an audit or investigation will result in a favorable resolution.

Request a Call with Texas Tax Defense Lawyer Lawrence Brown

If you would like more information about the IRS’ Pre-Filing Agreement program for large business and international taxpayers (or the other options that are available), we invite you to get in touch. To request a call with Texas tax defense lawyer Lawrence Brown, please call 888-870-0025 or tell us how we can reach you online today.