IRS To Unveil Plan to Close “Major Tax Loophole”

( – The United States Department of the Treasury and the IRS want to unveil a plan that would “close a major loophole” used by large, complex partnerships. The plan is going to target “related party basis shifting,” where single businesses can operate through multiple legal entities, allowing them to take more deductions or reduce future gains.

IRS Commissioner Danny Werfel spoke out saying, “These tax shelters allow wealthy taxpayers to avoid paying what they owe.”

They studied the issue and explored solutions that would prevent companies for taking advantage of it. This plan is going to build on the ongoing IRS efforts to increase audits on the wealthiest taxpayers, largest corporations, and complex partnerships.

“Treasury and the IRS are focused on addressing high-end tax abuse from all angles, and the proposed rules released today will increase tax fairness and reduce the deficit,” said Janet Yellen, the U.S. Secretary of the Treasury.

According to the Treasury, pass-through business filings with more than ten billion dollars in assets increased seventy percent within nine years, but the audit rate for these partnerships fell immensely. This has led to a one hundred and sixty million dollar tax year gap.

White House National Economic Council Advisor Lael Brainard said, “We should ensure ultra-wealthy taxpayers pay what they owe and play by the same rules by maintaining the President’s investment in the IRS.”

IRS funding has been a hot topic for Republicans following Congress’s approval of nearly eighty billion dollars in funding as a part of the Inflation Reduction Act.

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