The IRS wants to end another major tax loophole for the wealthy

The IRS wants to end another major tax loophole for the wealthy

The IRS wants to end another major tax loophole for the wealthy

The Internal Revenue Service plans to end another major tax loophole that could raise more than $50 billion in revenue over the next decade

ByJOSH BOAK Associated Press and FATIMA HUSSEIN Associated Press

June 17, 2024, 8:45 AM

    WASHINGTON -- The IRS plans to end a major tax loophole for wealthy taxpayers that could raise more than $50 billion in revenue over the next decade, the U.S. Treasury Department says.

    The guidance and ruling being announced Monday includes plans to essentially stop “partnership basis shifting" — a process by which a business or person can move assets among a series of related parties to avoid paying taxes.

    Biden administration officials said after evaluating the practice that there are no economic grounds for these transactions, with Deputy Treasury Secretary Wally Adeyemo calling it “really just a shell game.” The officials said the additional IRS funding provided through the 2022 Inflation Reduction Act had enabled increased oversight and greater awareness of the practice.

    “These tax shelters allow wealthy taxpayers to avoid paying what they owe," IRS commissioner Danny Werfel said.

    Due to previous years of underfunding, the IRS had cut back on the auditing of wealthy individuals and the shifting of assets among partnerships and companies became common.

    The IRS says filings for large pass-through businesses used for the type of tax avoidance in the guidance increased 70% from 174,100 in 2010 to 297,400 in 2019. However, audit rates for these businesses fell from 3.8% to 0.1% in the same time frame.

    Treasury said in a statement announcing the new guidance that there is an estimated $160 billion gap between what the top 1% of earners likely owe in taxes and what they pay.

    Monday's announcement is part of the IRS’s ongoing effort to zero in on high-wealth tax cheats who manipulate the tax code or don't pay their taxes at all.

    Initiatives announced in the past year have included pursuing people and businesses that improperly deduct personal flights on corporate jets and collecting back taxes from delinquent millionaires.

    The IRS plans to raise audit rates on companies with assets above $250 million to 22.6% in 2026, from an 8.8% rate in the tax year 2019. It also plans to increase audit rates by tenfold on large complex partnerships with assets over $10 million.

    ___

    See all of the AP’s tax season coverage at https://apnews.com/hub/personal-finance.

    OTHER NEWS

    15 minutes ago

    Live updates: Biden drops out of 2024 presidential race, endorses Harris

    17 minutes ago

    Joe Biden Endorses Kamala Harris As Democratic Presidential Nominee

    18 minutes ago

    Israeli military claims attack on Houthi-linked sites in Yemen are ‘necessary’

    18 minutes ago

    The Bear season 4: Everything we know so far

    18 minutes ago

    Mel Gibson's Braveheart prop and Sean Connery's outfit to be auctioned

    18 minutes ago

    Rugby-Scotland score half century of points in test win over Chile

    18 minutes ago

    Rafa Marquez leaves Barcelona Atletic for Mexico role

    18 minutes ago

    Debut goal 'surreal' - Forbes

    18 minutes ago

    Man City forward Kayky, 21, emerges as loan target for Eredivisie outfit Sparta Rotterdam - with the Brazilian forward expected to depart the Etihad this summer

    18 minutes ago

    Wildfire blazes across 150 acres, forcing Salt Lake City residents to evacuate

    18 minutes ago

    Video: Love Island SPOILER: Tension rises in the villa as savage fan favourite challenge returns

    18 minutes ago

    Video: Rihanna turns heads in sexy top and baggy trousers as she steps out in NYC - after inking new Fenty Beauty deal with the Paris Olympics

    18 minutes ago

    Russia sentences American Michael Travis Leake to 13 years on alleged drug charges

    18 minutes ago

    Xander Schauffele wins Open Championship with final-round 65 for second major of 2024

    18 minutes ago

    Remembering Robin Williams, beloved 'Mrs. Doubtfire' actor

    18 minutes ago

    Patrick Mahomes launched an effortless deep pass to Xavier Worthy that makes a Chiefs 3-peat look like a lock

    18 minutes ago

    Comedy is harder now because you can’t make jokes about being foreign, says Maureen Lipman

    18 minutes ago

    CrowdStrike outages highlight inequalities between big business and mom & pop shops

    18 minutes ago

    Rafael Nadal suffers straight-sets defeat against Nuno Borges in Nordea Open final ahead of Paris Olympics

    18 minutes ago

    League One goalkeeper, 23, missed the chance to join Man United after failing TWO medicals with the club

    18 minutes ago

    Volleyball player who was jailed for raping a 12-year-old British girl BANNED by the Dutch Olympic Committee from speaking to the media at Paris Olympics amid backlash over his participation

    18 minutes ago

    'Twister,' 'Twisters' and the actual practice of storm chasing

    18 minutes ago

    Korean star's hole in one a 100-year British Open first

    18 minutes ago

    Klitschko: Zelensky 'risks political suicide' in case of concessions to Russia, will need to hold referendum

    18 minutes ago

    Pittsburgh Steelers 7-Round Mock Draft: Tyleik Williams and Keeanu Benton Form an Immovable Duo

    18 minutes ago

    Engineering company turns heads with 800-mile journey in all-electric 18-wheeler: 'The world's biggest electric road trip'

    18 minutes ago

    Washington Commanders 7-Round Mock Draft: Malaki Starks Remakes the Secondary

    18 minutes ago

    How all 18 LIV Golf players fared at the 2024 British Open at Royal Troon

    18 minutes ago

    49ers News: 49ers' Sixth Cornerback Spot: Who Will Secure It?

    18 minutes ago

    GPs warn of 'considerable backlog' after IT outage and say 'normal service' will take time

    18 minutes ago

    Oscar Piastri's mum's hilarious comments watching son win Hungarian F1 GP

    18 minutes ago

    Rays place starting pitcher on IL

    18 minutes ago

    From Stockholm to St Pat's - The Irish winger looking to rekindle his spark

    18 minutes ago

    Billy Horschel golf bag at Open Championship: Why American has West Ham colors, logo on bag at 2024 British Open

    18 minutes ago

    Labour’s tax raid on private school fees could hit families as soon as January

    18 minutes ago

    ‘Silly’ to think women could beat men at darts – Matchplay champion Beau Greaves

    18 minutes ago

    Putin faces new crisis as a crucial Siberian bridge collapses

    18 minutes ago

    2 Avalanche prospects ranked among NHL's finest

    18 minutes ago

    It is difficult for Bharti to digest defeat: Bansuri Swaraj

    18 minutes ago

    The pilot who died in crash after releasing skydivers near Niagara Falls has been identified