June 18, 2024

Van Hollen, Warren, Whitehouse, Applaud Treasury and IRS Crackdown on Partnership Shell Games

Closing this major loophole is expected to raise $50 billion in tax revenue over the next ten years.

Following today’s announcement from the Treasury Department (Treasury) and the Internal Revenue Service (IRS), U.S. Senators Chris Van Hollen (D-Md.), Elizabeth Warren (D-Mass.), and Sheldon Whitehouse (D-R.I.), released the following statements celebrating the closure of a major tax loophole: 

“For too long, billionaires and big corporations have been able to hire high-priced lawyers to game the system to avoid paying their fair share in taxes. That’s why this action, which makes clear that some of these schemes constitute illegal basis shifting, will help ensure that the wealthiest of the wealthy pay their taxes due and owing – supporting further investments in the priorities of everyday Americans,” said Senator Van Hollen, Chairman of the Senate Appropriations Financial Services and General Government Subcommittee.

“Our tax code needs to work for everyone, not just those at the top. Closing this rule means the super wealthy can no longer move assets around their complex partnerships in a tax shell game to avoid paying what they owe. Over the next 10 years, closing this rule will help us invest billions in the American people instead of padding big business pockets,” said Senator Warren, member of the Senate Finance Committee. 

“Giant corporations and wealthy individuals employ an armada of accountants and lawyers to exploit loopholes in the tax code and get out of paying their fair share. I’m glad to see this new guidance from Treasury cracking down on a favorite tax avoidance trick of the super rich.  This change to increase tax fairness will raise billions of dollars a year to invest in an economy that works for the middle class and reduce the deficit,” said Senator Whitehouse, member of the Senate Finance Committee

The Treasury and IRS announced a crackdown on “basis shifting”, a loophole that allows businesses and wealthy individuals to reduce their tax bills by billions of dollars a year. Basis shifting allows for complex business partnerships to move assets around from one entity to another to avoid taxes. 

In October 2023, Senators Warren, Whitehouse (D-R.I.), Van Hollen (D-Md.) and Sanders (I-Vt.) urged the Treasury and IRS to proactively use their rulemaking authority to take on major proactive rulemaking projects and close tax loopholes that create unfairness in the tax system and threaten the government’s ability to raise important revenue.