Monte Jackel on Federal Partnership Tax Reform

Last week, the General Accounting Office (GAO) issued a report describing the poor audit performance of the IRS in the auditing of what are known as “large partnerships” ($100 Million or more of assets and 100 or more partners). See GAO Report 23-106020, July 27, 2023. In a statement on this report, Senator Wyden, Chair of the Senate Finance Committee, stated that “Large partnerships are the Wild West of tax compliance….The business structures are extraordinarily complicated, the tax rules that apply to them are riddled with loopholes, and the wealthy investors and corporations who use them to get out of paying a fair share know that the IRS has zero ability to crack down. Congress never intended for large partnerships to become the granddaddy of all tax loopholes.” See Wyden Statement On GAO Report. Slightly short of two years ago, the senator introduced a discussion draft of new partnership tax reform proposals. See Wyden Partnership Reform Proposals.

In response to the GAO report and Senator Wyden’s statement, Monte A. Jackel of Jackel Tax Law wrote a short note linking to a compilation of partnership tax reform papers that he republished in SSRN not long ago, entitled “Partnership Tax Reform: Combined Tax Notes Material”. The abstract and link follows.

Below is the abstract for “Partnership Tax Reform: Combined Tax Notes Material”, available for download on SSRN.

This article is a compilation of various articles and letters to the editor dealing with partnership tax reform that were written by me and published in Tax Notes, a publication of Tax Analysts, Fairfax Virginia. The material was republished with the express permission of Tax Analysts in SSRN.[1]

Although there is no pending ALI project relating to federal tax reform, this subject is getting increased attention on Capitol Hill, specifically with the majority leader and staff of the Senate Finance Committee. The collected material first provides background on the problem: the desperate need for partnership tax reform.[2] The material then sets forth specific proposals for partnership tax reform. The goal of this reform is to reduce the tax gap, reduce the present law opportunities for abuse and to provide a workable system of taxation dealing with partnerships and partners.

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