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Robert Kovacev Quoted on IRS CAP Expansion to Include Partnerships in Law360 Tax Authority

"Real-Time Partnership Audits Would Give IRS Trove of Data"

Law360 Tax Authority

Robert Kovacev discussed the Internal Revenue Service's (IRS) call for comments in a September 15, 2023, release (IR-2023-171) on whether a compliance assurance process (CAP) program for partnerships would be useful because of the agency's plans for greater scrutiny of such entities. The IRS would benefit from a CAP program for partnerships because it doesn't understand large partnerships as fully as it does large corporations, Kovacev said. The agency would get information that could be useful in data analytics regarding partnerships, and it could even get a head start on collecting information on partnerships before launching a CAP program. "The audit of 75 partnerships is a good start to educate the IRS on the tax attributes of large partnerships," Kovacev said. The increased funding for the agency may encourage partnerships to participate in the program. It should serve as a warning to large partnerships that they'll face greater scrutiny from the IRS, which they have generally avoided in the past several years, he noted. "Given that, it makes sense for a large partnership that is largely compliant to want to enter into a CAP-like program to avoid the burden of a potentially contentious audit."