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- Title
Complex Large Partnerships Force Repeal of the Tax Equity and Fiscal Responsibility Act.
- Authors
Pilato, Biagio
- Abstract
There has been a tremendous growth in the number of large partnerships in recent years. The Government Accountability Office reports that the number of large partnerships has tripled since 2002. A large partnership is a partnership with at least 100 partners and $100 million in assets. These partnerships report billions of dollars of revenue each year. Together they hold more than $7.5 trillion in assets. Large partnerships include hedge funds, private equity funds, and publicly traded partnerships. These partnerships are so large that some have 100.000 or more partners arranged in multi-tiered partnership structures. According to the GAO, there were more than 1.000 partnerships with greater than a million partners in 2012. In addition, some of these partnerships are publicly traded partnerships and the ownership interests in these partnerships changes every trading day. Large partnerships are very complex structures. Due to their size and complexity, the audit procedure used by the IRS has not been effective. As a result, the IRS has audited only a very small percentage of these large partnerships. A Government Accountability Office study found that the IRS audited less than one percent of large partnerships in 2012. The tax audit inefficiency has existed because of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). TEFRA was enacted at a time when partnerships were relatively small. The typical large partnership back in 1982 had fewer than 50 partners, not the 100,000 or 1,000,000 partners we see today. TEFRA has limited the ability of the IRS to perform effective audits. Due to their size and complexity, the audit procedure that was used by the IRS has not been effective with large partnerships. The newly enacted Bipartisan Budget Act of 2015, P.L. 114-74, signed November 2, 2015, has repealed the outdated provisions of the Tax Equity and Fiscal Responsibility Act. The Bipartisan Budget Act of 2015 will focus on streamlining the audit and adjustment procedures used for large partnerships.
- Subjects
BUSINESS partnerships; BUSINESS development; BUSINESS enterprises; UNITED States. Tax Equity &; Fiscal Responsibility Act of 1982; TAX incidence
- Publication
Review of Business, 2016, Vol 37, Issue 1, p44
- ISSN
0034-6454
- Publication type
Article