SIMPLE AUDITS FOR SIMPLE TAX PARTNERSHIPS

New rules targeting sophisticated tax partnerships unnecessarily burden small, unsophisticated taxpayers. This is a familiar narrative in partnership tax. This time, the story takes place in the rules that prescribe the process by which the IRS audits and collects tax from partnerships and partners. Designed to limit abuse, the rules are highly complex and needlessly saddle small, simple businesses with increased compliance costs and potentially excessive tax liability.

Ironically, at the same time, the rules leave loopholes for sophisticated organizations able to exploit them. This Article explains these disparate consequences and suggests solutions to both limit the loopholes for large taxpayers and simplify the rules for small businesses.