The Inflation Reduction Act allocated billions of dollars in additional funding to the Internal Revenue Service (IRS) to address the "tax gap"—the difference between the taxes owed by taxpayers and what they actually pay. In response, the IRS has initiated several programs to enhance compliance, with a particular focus on businesses. Let's examine three of the most significant recent initiatives.

The IRS has accelerated its enforcement efforts against partnerships and other pass-through entities, which it claims have been overlooked for more than a decade. According to the IRS, while tax filings for pass-through entities have jumped by 70 percent since 2010, audit rates for them fell from 3.8 percent in 2010 to 0.1 percent in 2019.

To remedy this, the tax agency is creating a new office that will focus exclusively on partnerships, S corporations, trusts and estates. That’s in addition to a special work group focused on pass-throughs, including complex partnerships, in its Large Business and International Division.

Please select this link to read the complete article from OSAP Mission Partner Clark Schaefer Hackett (CSH).