Accounting
IRS proposes to end penalties on basis-shifting transactions
The Treasury Department and the Internal Revenue Service are planning to withdraw regulations that labeled basis-shifting transactions among partnerships and related parties as “transactions of interest” akin to tax shelters and stop imposing penalties on them.
In
The notice provides immediate relief from penalties under Section 6707A(a) to participants in transactions identified as transactions of interest in the Basis Shifting TOI Regulations that are required to file disclosure statements under Section 6011, and (ii) penalties under Sections 6707(a) and 6708 for material advisors to transactions identified as transactions of interest in the basis-shifting regulations that are required to file disclosure statements under § 6111 and maintain lists under Section 6112.
The notice also withdraws Notice 2024-54, 2024-28 I.R.B. 24 (Basis Shifting Notice), which describes certain proposed regulations that the Treasury Department and the IRS intended to issue addressing partnership related-party basis-shifting transactions.
The
The IRS and the Treasury acknowledged in Thursday’s notice that it had heard similar objections. “Taxpayers and their material advisors have criticized the Basis Shifting TOI Regulations as imposing complex, burdensome, and retroactive disclosure obligations on many ordinary-course and tax-compliant business activities, creating costly compliance obligations and uncertainty for businesses,” said the notice.
It cited an
Last June, former IRS Commissioner Danny Werfel announced a
“Our announcement signals the IRS is accelerating our work in the partnership arena, an arena that has been overlooked for more than a decade with our declining resources,” said Werfel during a press conference last year. “We’re concerned tax abuse is growing in this space, and it’s time to address that. So we are building teams and adding expertise inside the agency so we can reverse these long-term compliance declines.”
Using complex maneuvers, high-income taxpayers and corporations would strip the basis from the assets they owned where the basis was not generating tax benefits and then move the basis to assets they owned where it would generate tax benefits without causing any meaningful change to the economics of their businesses. The basis-shifting transactions would enable closely related parties to avoid paying taxes. The Treasury estimated last year that the transactions could potentially cost taxpayers more than $50 billion over a 10-year period.
“For example, a partnership might shift tax basis from a property that does not generate tax deductions, such as stocks or land, to property where it does, like equipment,” said former Deputy Secretary of the Treasury Wally Adeyemo during the same press conference. “Businesses have also used these techniques to depreciate the same asset over and over again.”
Congress has since removed much of the extra funding from the Inflation Reduction Act that was being used to scrutinize such transactions, and the IRS has been
Bloomberg via Getty Images
Amid the agency’s turmoil this year, the Internal Revenue Service has some good news from 2024 regarding service and collections.
The agency helped taxpayers on 62.2 million occasions in FY24, up 3.2% over the prior fiscal year, and took in a new high in revenue, according to its latest annual
IRS toll-free customer service lines provided live telephone assistance to almost 20 million callers during the fiscal year, up some 11% from 2023. At Taxpayer Assistance Centers, the agency helped more than 2 million taxpayers in person, an increase of almost 26% over FY2023.
For the first time, revenue collected exceeded $5 trillion ($5.1 trillion), an increase of almost 9% compared to the prior fiscal year total.
The Data Book gives a fiscal year overview of the agency’s operations, including returns received, revenue collected, taxpayer services provided, tax returns examined (audits), efforts to collect unpaid taxes and other details. Among other FY24 highlights, the IRS:
- Launched more digital tools than it had during the previous 20 years. Online offerings saw more than 2 billion electronic taxpayer assistance transactions, 47% more than in FY23. The most popular features were requests for transcripts and Where’s My Refund? Overall, IRS.gov registered nearly 690 million individual visits with 1.7 billion page views.
- Processed more than 266 million returns and other forms from individuals, businesses and tax-exempt organizations; received almost 4.6 billion information returns; and issued close to $553 billion in refunds.
- Closed 505,514 tax return audits, resulting in $29 billion in recommended additional tax.
The net collections — federal taxes that have been reported or assessed but not paid and returns that have not been filed — totaled almost $77.6 billion, an increase of 13.6% compared to FY23. The agency collected more than $16 billion through installment agreements, an increase of more than 12% compared to the prior fiscal year.
The Data Book also covers statistics on Direct File, taxpayer attitude surveys about satisfaction with the IRS and “acceptable” levels of cheating on taxes, and applications for tax-exempt status, among other topics.
Total postsecondary spring enrollment grew 3.2% year-over-year, according to a report.
The National Student Clearinghouse Research Center published the latest edition of its
The report found that undergraduate enrollment grew 3.5% and reached 15.3 million students, but remains below pre-pandemic levels (378,000 less students). Graduate enrollment also increased to 7.2%, higher than in 2020 (209,000 more students).
(Read more:
Community colleges saw the largest growth in enrollment (5.4%), and enrollment increased for all undergraduate credential types. Bachelor’s and associate programs grew 2.1% and 6.3%, respectively, but remain below pre-pandemic levels.
Most ethnoracial groups saw increases in enrollment this spring, with Black and multiracial undergraduate students seeing the largest growth (10.3% and 8.5%, respectively). The number of undergraduate students in their twenties also increased. Enrollment of students between the ages of 21 and 24 grew 3.2%, and enrollment for students between 25 and 29 grew 5.9%.
For the third consecutive year, high vocational public two-years had substantial growth in enrollment, increasing 11.7% from 2023 to 2024. Enrollment at these trade-focused institutions have increased nearly 20% since pre-pandemic levels.
Jordan Vonderhaar/Photographer: Jordan Vonderhaar/
The Internal Revenue Service has released
The Inflation Reduction Act of 2022 amended Sec. 55 to impose the CAMT based on the “adjusted financial statement income” of an “applicable corporation” for taxable years beginning in 2023.
Among other details, proposed regs provide that “applicable corporation” means any corporation (other than an S corp, a regulated investment company or a REIT) that meets either of two average annual AFSI tests depending on financial statement net operating losses for three taxable years and whether the corporation is a member of a foreign-parented multinational group.
Prior to the publication of any final regulations relating to the CAMT, the Treasury and the IRS will issue a notice of proposed rulemaking. Notice 2025-27 will be in IRB: 2025-26, dated June 23.
DLTR, WFC, CEG and more
IRS paints a strong picture from fiscal 2024 in annual Data Book
ADP jobs report May 2025:
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
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