The roughly $60 billion entitlement program serves 25 million taxpayers but is plagued with fraud.Īlso under a fresh microscope are construction companies that funnel payments to subcontractors through shell companies, avoiding tax bills in the process.įor its increased scrutiny of partnerships, the tax collector is using AI. It also said it was implementing “new fairness safeguards” to protect low-income workers who claim the Earned Income Tax Credit. The IRS reiterated on Friday a prior pledge not to boost audits of people earning less than $400,000 a year. And eight in 10 audits didn’t find anything wrong. Partnership audit rates have dropped to less than 0.5% since 2007, when the rate was roughly three times higher, the GAO report found. Varieties include general partnerships (often used by professional services firms), limited partnerships (for outside investors in a fund or business), and limited liability companies, which are for owners who want to protect their personal assets from lawsuits on their businesses.ĭespite their growth in number and complexity, they haven’t faced a tax microscope. The entitiies can be highly complex, with multiple layers and relationships with other partnerships - a thicket that can make it difficult to see their financial flows. Some 84% of large partnerships provided finance and insurance services or real estate and rental leasing. In 2019, there were 20,052 large partnerships with more than $100 million in assets, nearly six times the number in 2002, a July report from the Government Accountability Office found. Meanwhile, partnerships have exploded in number. Werfel told reporters that the agency was expanding that focus and had recently contacted around 1,600 wealthy taxpayers who owe hundreds of millions of dollars in taxes. Instead, its profits flow through to its partners, who then report their share of taxable income or losses on their individual returns.Įarlier this year, the IRS said it collected $38 million from more than 175 high-income earners - a figure some tax lawyers called chump change. While a partnership must file an annual “information” return to the IRS, it doesn’t itself pay taxes, like Amazon or another corporation does. One prominent example: Bridgewater Associates, the world’s largest hedge fund, with around $197 billion in assets. Hedge and venture capital funds, private equity firms and real estate trusts, along with law firms, doctors’ groups, consulting firms and architects, tend to structure their businesses as partnerships. Publicly traded partnerships, large law firms and other industries will also fall under the microscope. The nation’s tax agency said it would begin auditing 75 of the largest partnerships in the country, each with more than $10 billion in assets, by the end of the month. The Internal Revenue Service on Friday declared war on hedge funds, law firms, real estate companies and high-income tax cheats that may be dodging the law.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |