The IRS is continuing its focus on compliance issues among some high-income earners, including partnerships. With funding from the Inflation Reduction Act (IRA), the agency is developing guidance designed to close loopholes used by some partnerships. Currently, the IRS is looking at tens of billions of dollars of deductions claimed by partnerships, with a focus on abusive transactions known as “basis shifting.” IRS Commissioner Danny Werfel calls basis shifting a sophisticated “shell game” that allows “complex partnership arrangements to hide from a tax bill.” These maneuvers have been difficult to uncover, he said, but with IRA funding, work in this noncompliance area is accelerating.
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