Treasury Announces Measures To Close Tax Loophole, Raise USD$50B New Revenue

The US Treasury Department and the IRS has announced measures to close a, “major tax loophole exploited by large, complex partnerships,” which they claim will raise more than USD$50 billion in new revenue over the next 10 years.

• Treasury said in a statement: “Among the techniques these taxpayers rely on to make billions of dollars in taxable income disappear are what are known as partnership basis shifting transactions… These transactions defy congressional intent to avoid tax liability with little to no other economic consequences for the participating businesses.”
• “Following over a year of study of these issues, Treasury and IRS are today announcing their intent to propose regulations under existing regulatory authority to stop related parties in complex partnership structures from shifting the tax basis of their assets amongst each other... [and] proposing to increase the reporting of these transactions to the IRS and are providing a ruling to inform taxpayers that certain transactions will be challenged for lack of economic substance.”
• Treasury Janet Yellen said in a statement: “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. Thanks to resources from President Biden’s Inflation Reduction Act, Treasury and the IRS have the tools to stop longstanding abuses.”
• The announcement comes a week after President Biden's top economic advisor, Lael Brainard, unveiled the administration's key principles for tax policy ahead of the expiration of former President Donald Trump's first-term tax breaks in 2025.