Estimated $160 billion annual tax gap from top 1% of filers
IRS plans to close $50 billion tax loophole used by large partnerships
Related party basis shifting targets businesses trading original purchase prices for tax deductions or reduced gains
Wealthy taxpayers, large corporations and complex partnerships face increased audits
The IRS and Treasury Department have announced a plan to close a major tax loophole used by large partnerships, which could raise more than an estimated $50 billion in tax revenue over the next 10 years. The plan targets related party basis shifting, where businesses trade original purchase prices on assets for tax deductions or reduced gains. Wealthy taxpayers can avoid paying taxes through this method according to IRS Commissioner Danny Werfel. Proposed regulations aim to increase audits on wealthy taxpayers, large corporations and complex partnerships. The estimated tax gap attributed to top 1% of tax filers is $160 billion a year. The plan builds on ongoing IRS efforts to increase audits on the wealthiest taxpayers, large corporations and complex partnerships. Pass-through business filings with more than $10 million in assets increased 70% between 2010 and 2019, but the audit rate for these partnerships fell from 3.8% to 0.1% during that period. This has contributed to an estimated $160 billion a year tax gap – the shortfall between what is owed and collected – attributed to the top 1% of tax filers, the agency said.
The Internal Revenue Service (IRS) announced its latest effort to crack down on wealthy tax cheats.
, The IRS is using additional funds from the act to improve taxpayer services and modernize its systems.
, IRS Commissioner Danny Werfel said that audits will target these kinds of transactions that have no substantial business purpose other than to reap a tax benefit.
, The new IRS initiative targets abuse of what’s known as ‘basis shifting transactions’, where complex business partnerships move money from one property to another in order to maximize tax deductions and minimize their tax liability.
, IRS is hiring accountants, engineers, economists, data scientists, attorneys and tax experts needed to conduct complex audits to ramp up audits of wealthy taxpayers and large corporations.
, Werfel has repeatedly said the agency is committed to shielding American households that earn less than $400,000 a year from an increase in audit rates.
, The IRS is also using the funds from the Inflation Reduction Act to improve taxpayer services, such as answering more calls and launching a pilot version of its own tax filing service called Direct File.
Accuracy
]The IRS is using additional funds from the act to improve taxpayer services and modernize its systems.[
This initiative could result in the collection of $50 billion over 10 years by closing a major tax loophole used by some business partnerships to avoid paying taxes they owe.
The new IRS initiative targets abuse of what’s known as ‘basis shifting transactions’, where complex business partnerships move money from one property to another in order to maximize tax deductions and minimize their tax liability.
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(95%)
The article by Katie Lobosco contains some instances of appeals to authority and inflammatory rhetoric but no formal or dichotomous fallacies. The author quotes Treasury Secretary Janet Yellen and IRS Commissioner Danny Werfel to establish their expertise on the topic, which is a valid use of an appeal to authority. However, the author also uses phrases like 'eager to show' and 'Republicans are at odds with Democrats over' that convey a negative tone towards certain political parties. This inflammatory rhetoric does not detract significantly from the overall quality of the article and does not impact its accuracy.
]The IRS is eager to show how it's using money from the 2022 legislation to bring in more tax revenue and modernize taxpayer services.[
Republicans are at odds with Democrats over the IRS funding.
The Biden administration plans to stop businesses and wealthy individuals from manipulating the value of assets in arcane ways to lower their taxes.
High-end business partnerships like hedge funds and wealthy individuals such as real estate investors have inappropriately used labyrinthine structures to shield tens of billions of dollars from taxation.
Shutting down inappropriate basis shifting can increase tax collections from partnerships by at least $5 billion a year over the next decade.
Accuracy
]The Biden administration plans to stop businesses and wealthy individuals from manipulating the value of assets in arcane ways to lower their taxes.[
The IRS plans to end a major tax loophole for wealthy taxpayers called 'partnership basis shifting' which could raise over $50 billion in revenue.
There is an estimated $160 billion gap between what the top 1% of earners likely owe in taxes and what they pay.
Filings for large pass-through businesses used for tax avoidance increased by 70% from 2010 to 2019, while audit rates fell from 3.8% to 0.1% in the same time frame.
Accuracy
The IRS had cut back on auditing wealthy individuals and the shifting of assets among partnerships and companies became common.
