IRS's Secretive $700 Billion Tax Hike: A Call to Action
The Internal Revenue Service (IRS) is currently embroiled in a controversial issue regarding the taxation of pass-throughs and partnerships. If the IRS isn't instructed to cease, it could be responsible for the largest non-congressionally approved tax increase in American history, amounting to a potential $730 billion business tax increase over the next decade, according to the Joint Committee on Taxation.
The IRS is attempting to administratively change the taxation of these entities, subjecting them to "guilty until proven innocent" audits. This rewrite of the tax laws would be applied without congressional approval.
The economic substance doctrine forms the basis for determining how taxes on a business's profits are applied to the partners. The changes could result in increased tax assessments for these entities, potentially leading to a large tax bill and a strict liability penalty of 60%.
Sen. Ron Wyden, the ranking Democrat on the Senate Finance Committee, has introduced legislation to codify these new rules into law. However, the search results do not provide the name of the senator involved with the Biden administration in changing the taxation of corporations and partnerships or in legislating this law.
The Biden-era rules for partnership taxation still stand due to turmoil at the IRS. The IRS, under the Biden administration, has hired thousands of new agents and has been accused of harassing businesses, rich people, and Republican donors. Some officers under Lois Lerner, a former IRS enforcer known for targeting conservative groups, are still active at the tax agency.
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The 2024 study by Ernst and Young for the Small Business Entrepreneur Council found that 10 million Americans work for these partnerships and they generate $1.3 trillion in gross domestic product. This underscores the significant impact these changes could have on the economy and the millions of Americans employed by these partnerships.
Microsoft's revenues and profits flow through its business partners, which are a significant contributor to the U.S. economy. The Trump administration is supposed to be easing the tax burden on businesses, not handing them a three-quarter-trillion-dollar tax increase.
The issue of partnership taxation is a complex one with far-reaching implications. It's a matter that warrants close attention and careful consideration, especially given its potential impact on the American economy and the millions of Americans employed by partnerships.
This article is copyrighted by Creators.com in 2025. Stephen Moore, a former Trump senior economic adviser and the cofounder of Unleash Prosperity, which advocates for education freedom for all children, has expressed concerns about these changes. John Marshall, the Chief Justice, famously stated that the power to tax involves the power to destroy. In this context, it's crucial that the IRS's actions are scrutinised and that the interests of American businesses and workers are protected.
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