US Treasury, IRS to close $50 billion tax loophole on partnerships By Reuters

By David Lawder

WASHINGTON (Reuters) -The imf foreign exchange official websiteU.S. Treasury and Internal Revenue Service said on Monday they will close a tax loophole exploited by large, complex partnerships, an action that they estimated could raise $50 billion in new revenue over 10 years.

The Treasury said the IRS would no longer allow partnerships to shift tax liabilities to related parties or different legal entities in order to maximize tax deductions and minimize liability.

New guidance on the subject coincides with the IRS' stepped-up enforcement campaign to increase audits of large, complex partnerships, backed by some $60 billion in funding over 10 years for the agency approved by Congress in 2022.

The IRS is releasing several proposed regulations related to the change, which would prevent transactions that shift the tax basis of assets to reduce gains and taxable income.

"The proposed regulations, once finalized, would effectively eliminate the inappropriate tax benefits created from these abusive transactions between related parties," the Treasury said in a statement.

The Treasury and IRS also are releasing a revenue ruling stating that certain related-party partnership transactions to shift tax basis "lack economic substance," which Treasury said would support the IRS position in current and future audits.

The Treasury said tax filings from "passthrough" business partnerships increased by 70%, to 297,400 in 2019 from 174,100 in 2010. But the audit rate for these partnerships fell to 0.1% in 2019 from 3.8% in 2010, due in large part to budget cuts over the decade.

Statement: The content of this article does not represent the views of FTI website. The content is for reference only and does not constitute investment suggestions. Investment is risky, so you should be careful in your choice! If it involves content, copyright and other issues, please contact us and we will make adjustments at the first time!