IRS partnership audit program falters after senior staff departures

The Internal Revenue Service’s push to audit private equity, venture capital and large real estate partnerships has faltered since President Trump returned to office, with nearly all senior leaders of the effort leaving the agency and many audits abandoned or scaled back. The initiative had previously expanded rapidly: the I.R.S.

hired and trained hundreds of examiners to scrutinize partnership tax rules and by late 2023 planned to audit 75 of the largest partnerships, whose assets averaged more than $10 billion. The Treasury estimated the aggressive shelters the team uncovered were costing the public at least $100 billion over a decade, and I.R.S.

data show partnership profits grew to $2.6 trillion by 2022 from $267 billion in 2000. Progress on complex partnership audits has slowed markedly, tax lawyers and former officials said. Gary Huffman of Vinson & Elkins told The New York Times the emphasis on large partnership exams had dropped "80 or 90 percent.” The paper reported lawyers who handled many audits in 2024 saw far fewer in 2025, that about 15 officials overseeing the effort had quit, and that an I.R.S.

official in charge of the audits abruptly left early last year. Holly Paz, a top I.R.S. official, is suing the agency and alleges administration officials leaked her employment information to Fox News. The agency also laid off thousands of probationary employees under a Department of Government Efficiency project, which former I.R.S.

Key Topics

Business, Internal Revenue Service, Partnership Audits, Private Equity, Venture Capital, Holly Paz