IRS expands Pre-Filing Agreement program for big businesses

The Internal Revenue Service (IRS) is giving large corporations and international taxpayers a new way to reduce audit risks and resolve tax issues before filing. On June 17 the agency announced major updates to its Pre-Filing Agreement (PFA) program—an initiative designed to offer tax certainty to businesses under the jurisdiction of the IRS’s Large Business and International (LB&I) division.

The program helps companies address potential tax issues in advance, cutting down on disputes and encouraging proactive compliance. With these changes, the IRS aims to streamline participation and provide more transparency into the PFA process.

What is the Pre-Filing Agreement program?

The PFA program allows businesses to work with the IRS to resolve specific tax questions before filing their return. When a company anticipates a complex tax position, it can submit a PFA request to get the IRS’s view ahead of time. The outcome is a binding agreement that eliminates uncertainty, reduces the chances of an audit, and speeds up tax administration.

While the benefits are substantial, participation in the program requires a user fee of $181,500.

Key updates announced

As part of its 2025 overhaul, the IRS introduced several enhancements:

New PFA landing page: Includes program stats, easier navigation, and direct links to dispute prevention tools.
Step-by-step instructions: Clarifies how to submit a PFA request, including expectations on response times.
Issue identification guide: Helps taxpayers determine whether their issues are eligible for pre-filing agreements.
Updated submission guidelines: Aligns PFA timelines more closely with tax filing deadlines for smoother resolution.

These changes signal a broader IRS strategy to promote cooperative tax compliance among large businesses and multinational entities.

When and how to submit a request

To get the most from the program, the IRS recommends submitting PFA requests as early as possible—ideally:

Within 60 days of completing the transaction in question, or
Within 30 days of the close of the tax year

This gives the IRS roughly 8–9 months to process and finalize the agreement. Requests should be submitted with supporting documentation. If the taxpayer is under LB&I examination, requests must go to the assigned case manager; otherwise, submissions can be emailed to [email protected].

Suitable issues for PFA requests

The IRS provides a nonexclusive list of tax issues it considers appropriate for PFAs. These include:

Research credit (a leading topic, accounting for much of past requests)
Worthless securities deductions under IRC Section 165(g)(3)
Sale/leaseback transactions
International tax issues like U.S. trade or business determinations, permanent establishment status, and deductions against effectively connected income

Between 2019 and 2024, 67% of all PFA requests were accepted. Research credit and worthless stock deductions accounted for 57% of submissions.

What to expect after submission

Once a request is submitted:

The IRS will acknowledge receipt within five business days
Review usually takes 60 days, though complex issues may take longer
If accepted, the IRS and the taxpayer collaborate to finalize an agreement
If denied, the IRS will explain why and suggest next steps

To avoid delays, businesses must ensure their documentation is complete and include a Form 2848 if represented by a tax professional.

IRS continues push for dispute prevention

These enhancements reflect a growing emphasis within the IRS on proactive dispute prevention—especially in the complex landscape of international and corporate taxation. By resolving major issues before returns are filed, the IRS reduces its own enforcement burden while helping taxpayers gain clarity.

For companies with billions on the line, tax certainty isn’t just a luxury—it’s a competitive advantage.

Digital Team

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