July 27,2023

Wyden Statement on GAO Report on the Lack of Audits of Large Partnerships

Washington, D.C.—Senate Finance Committee Chairman Ron Wyden, D-Ore., today released the following statement on a new Government Accountability Office report he requested into the growing prevalence of businesses structured as large partnerships and the IRS’s struggle to ensure they pay the taxes they owe. The report, IRS Audit Processes Can Be Strengthened to Address a Growing Number of Large, Complex Partnerships, found that the number of large partnerships increased nearly 600 percent from 2002 to 2019, but the audit rate for large partnerships was less than 0.3 percent in 2019, down from more than 1.5 percent in 2007. 

“Large partnerships are the Wild West of tax compliance,” Wyden said. “The business structures are extraordinarily complicated, the tax rules that apply to them are riddled with loopholes, and the wealthy investors and corporations who use them to get out of paying a fair share know that the IRS has essentially zero ability to crack down. Congress never intended for large partnerships to become the grand-daddy of all tax loopholes. As a matter of basic fairness, the Congress ought to close these large partnership loopholes that allow investors and corporations to make their taxes simply disappear. And Democrats must protect the IRS’s enforcement resources to ensure typical working Americans, whose taxes come straight out of every paycheck, aren’t getting ripped off by scofflaws at the top.” 

Seventy percent of partnership income accrues to the top 1 percent. Most businesses structured as large partnerships are involved in financial services, insurance, real estate and rental leasing. GAO’s study defined large partnerships as having $100 million or more in assets and 100 or more total partners. 

In 2021 Wyden released a draft proposal closing loopholes that allow wealthy investors and mega-corporations to use partnership tax rules to avoid paying their fair share of taxes. Scored at the time, the proposal would have raised at least $172 billion -- without any increase in tax rates. It remains under development for introduction in the future. 


Press Contact: Ryan Carey