The IRS is getting ready to go after what it calls “large, complex partnerships” as part of its push to pursue wealthy tax cheats with tens of billions of dollars in additional funding.
The IRS plans to double audit coverage for partnerships with $10 million or more in assets by fiscal year 2025 over fiscal 2021 levels.
But new research from the government’s internal watchdog finds that the specific types of legal and commercial structures the IRS is targeting need to be more clearly defined in order to recoup the uncollected funds.
“IRS has not defined or developed guidance on what a large, complex partnership is or developed measures to ensure additional audits focus on such partnerships,” the Government Accountability Office (GAO) wrote in a report released Thursday.
Pinning down partnerships
Partnerships don’t pay taxes directly but pass their tax liability onto their owners through an IRS form K-1. They can be nested within other partnerships in networked or circular structures so complex they can resemble a tangle of spiderwebs or pieces of Byzantine jewelry.
This makes it difficult to audit them, as evidenced by atrophying audit rates.
“The lack of a definition presents a challenge as IRS seeks to increase its audit coverage of partnerships,” the report read.
In a response to the criticism, the IRS acknowledged the haziness in the definition and said it’s working to be more precise.
“We plan to perform additional research and analysis to better understand the characteristics and define partnership segments,” Douglas O’Donnell, the deputy commissioner for services and enforcement at the IRS, wrote in a letter to the GAO earlier this month.
Current IRS Commissioner Danny Werfel said earlier this month on a call with reporters that the public should expect more updates on how exactly the IRS is going after big partnerships soon.
“We’re … focused on increasing our exam coverage for complex partnerships,” Werfel said. “In our upcoming next briefing we’ll provide more details on that.”
“I’m looking forward to future updates,” he said.
Partnership boom expands the tax gap
The GAO analysis found that only 54 large partnerships out of more than 20,000 got audited in 2019, for a rate of 0.3 percent.
That is just a hair shy of the audit rate for people who make $25,000 a year or less. In 2007, the audit rate for large partnerships was more than quadruple that.
Partnerships have also exploded in recent years as a commercial designation within the economy.
In 2002, there were about 3,000 partnerships worth more than $100 million in the U.S. In 2019, there were more than six times that amount.
The number of partnerships worth between $1 billion and $5 billion dollars has increased more than tenfold during that period, and the number of partnerships worth more than $5 billion has increased more than eightfold.
Unreported business income on individual income tax — precisely the type of income that pass-through entities like partnerships allow — is one of the largest segments of the “tax gap,” the amount the government is owed in taxes each year but fails to collect.
The IRS estimated the tax gap for personal business income to be $130 billion annually for tax years 2014 to 2016, which was the last time the tax gap was formally measured, but it is likely much higher than that now.
The gross tax gap was about $500 billion in those years, but last year former IRS commissioner Charles Rettig said it could be as much as $1 trillion.
A two-tiered tax system
Tax experts have long looked askance at partnerships as a potential tax dodge.
“The IRS does not treat K-1 income the same way that it does reports of people’s wages filed on W-2 forms or the reports of income from dividends, interest, royalties and contract jobs reported on Form 1099,” veteran tax reporter David Cay Johnston wrote in a 2003 book on the U.S. tax system.
“IRS computers match every wage, dividend, interest, royalty and contract job report to what is listed on individual tax returns to make sure that every dollar earned in these ways is taxed. Not so partnership and K-1 reports,” he wrote.
The differential administrative treatment of partnership income is symptomatic of what Treasury Secretary Janet Yellen has described as the “two-tiered tax system” in the U.S.
“At the core of the problem is a discrepancy in the ways types of income are reported to the IRS: opaque income sources frequently avoid scrutiny while wages and federal benefits are typically subject to nearly full compliance,” she said in a 2021 statement on Congressional tax proposals.
Business The IRS is getting ready to go after what it calls “large, complex partnerships” as part of its push to pursue wealthy tax cheats with tens of billions of dollars in additional funding. The IRS plans to double audit coverage for partnerships with $10 million or more in assets by fiscal year 2025 over fiscal…
Roselyn Omaka Leads Sinc Healthcare’s Nationwide Expansion in Remote Patient Monitoring
Sinc Healthcare, a leader in the realm of remote patient monitoring and a sister company to UPL Care, is proud to announce Roselyn Omaka’s addition to their executive team. This significant move marks the expansion of Sinc Healthcare’s innovative Medicare-compliant services across all 50 states in the United States, underlining the company’s commitment to nationwide healthcare improvement.
With Omaka’s expertise, Sinc Healthcare is poised to extend its reach, offering cutting-edge remote patient monitoring services to healthcare providers and patients across the entire country. This expansion ensures that
no matter where patients are located, they have access to top-tier healthcare monitoring and support.
Omaka brings a unique blend of biochemistry knowledge and business acumen to Sinc Healthcare. Her leadership is expected to drive the company’s commitment to legal compliance, maximize reimbursements for providers, and reduce hospital readmissions, crucial in today’s healthcare landscape.
Sinc Healthcare, under Omaka’s direction, embraces the technological advancements of AI and remote patient monitoring. This approach is set to revolutionize patient care, especially for those unable to make frequent in-person visits to healthcare facilities.
The expansion of Sinc Healthcare’s services nationwide means more healthcare providers can:
- Offer enhanced patient care through remote monitoring.
- Maintain operational efficiency and compliance.
- Utilize data-driven insights for better patient outcomes.
Sinc Healthcare has been at the forefront of remote patient monitoring since 2014, with a zero lawsuit record, emphasizing its dedication to compliance and quality care. Its services are now available across all 50 states, making it a leading figure in nationwide healthcare innovation.
For additional information on Roselyn Omaka’s role and Sinc Healthcare’s expanded services, fill out this form.
Comedy Filmmaking 101: How to Master Verbal Timing
In the realm of filmmaking, every element contributes to the tapestry of your story, and among these, verbal timing stands as a powerful thread that can weave unforgettable moments into your narrative. In this comprehensive guide, we delve deep into the significance of the pause in filmmaking. Specifically, we explore how mastering the art of the pause can elicit audience reactions, enhance engagement, and immerse viewers in your storytelling.
Setting the Stage for Verbal Timing Before we dive into the nuances of the pause, it’s essential to lay a solid foundation by considering how it fits into the broader context of your film. Here’s how to prepare:
- Develop Vibrant Characters: Craft characters with distinct personalities, quirks, and dynamics to create meaningful interactions.
- Craft a Compelling Script: Your script should encompass moments of humor, drama, tension, and surprise, setting the stage for varied emotional experiences.
- Establish Pacing Rhythms: Align your pacing with the genre and overall tone of your film, ensuring a seamless flow that captivates your audience.
The Pause as a Narrative Device A well-executed pause serves as a narrative device that can be employed in various scenarios to heighten your storytelling:
- Comic Timing: In humorous scenes, a well-placed pause following a setup line amplifies the impact of the ensuing laughter.
- Dramatic Effect: During emotionally charged moments, pauses heighten tension and enable the audience to absorb the gravity of the situation.
- Suspense Building: In suspenseful or thriller genres, strategic pauses keep viewers on the edge of their seats, building anticipation.
The Emotional Pause To evoke specific emotional responses from your audience, consider these tips:
- Timing Variations: Experiment with pause lengths. A longer pause encourages deeper contemplation, while a shorter one maintains pacing.
- Character Reaction Shots: Capture character reactions after a significant line, showcasing the impact of the dialogue on the story’s emotional landscape.
- Dialogue Placement: Position critical lines just before a pause, allowing the audience to digest and react to pivotal information.
Timing for Humor In the world of comedy, timing reigns supreme. Maximize comedic impact with these insights:
- The Punchline Pause: Pause after delivering a setup to let the audience anticipate and relish the punchline.
- Timing Delivery: Practice diverse comedic delivery styles, rhythms, and pauses to identify what suits your script and characters best.
- Physical Comedy Integration: Don’t overlook the synergy between verbal timing and physical comedy, as they can enhance each other’s humorous effect.
The Unexpected Pause Surprise your audience with an unexpected pause to create memorable cinematic moments:
- Subverting Expectations: Deviate from anticipated pacing to catch viewers off guard, generating intrigue and excitement.
- Plot Twists: Before revealing a plot twist or shocking revelation, pause to amplify its impact, leaving a lasting impression.
The Power of Editing Verbal timing isn’t solely reliant on actors’ delivery during filming; the editing process plays a pivotal role:
- Adjusting Pace: Fine-tune dialogue timing in the editing room by trimming or extending pauses to achieve the desired effect.
- Sound Design: Collaborate with your sound team to enhance pauses with ambient sounds, music, or silence, further immersing the audience.
- Testing and Feedback: Seek feedback from test audiences to gauge the effectiveness of your verbal timing choices. Analyze moments where the pause successfully elicited the desired reaction and where refinements may be necessary.
Mastering verbal timing in filmmaking demands practice, creativity, and a profound understanding of storytelling. By weaving the power of the pause into your narrative, you can engage your audience emotionally, craft unforgettable comedic moments, and intensify the impact of dramatic sequences. Remember, the pause isn’t just about silence—it’s a dynamic tool that enriches your storytelling and invites the audience deeper into your cinematic world. Embrace this art, and witness your filmmaking skills flourish, leaving audiences eagerly awaiting your next project.
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For tickets to the February 10th, 2024 Houston Comedy Film Festival and film submissions, visit our website.
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