Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

NCEO employee ownership FAQ hero (keyboard)

What is a CAP (closing agreement program)?

There are two types of CAPs: "walk-in" and those initiated by the IRS. The walk-in procedure is voluntary and initiated by the company when it finds a problem. Under it, the IRS can impose taxes, including excise penalties, if it deems the violation serious enough. If the IRS finds the problem, the taxes and penalties are likely to be higher.

Link to this FAQ Topic: Governance, Fiduciaries & Compliance