WASHINGTON: Fewer than 1 percent of partnerships with more than $100m in assets, including hedge funds and private equity firms, are audited by the US Internal Revenue Service, a government report said.
Despite a surge in the number of partnerships over the last decade, the IRS did not conduct field audits for 99 percent of these tax-favored businesses from 2007 through 2012, said the preliminary report from the Government Accountability Office, the investigative arm of Congress.
In response to the GAO report, the IRS said partnership audits are a priority, but that “budget reductions over the past few years have severely limited our work in this area.” The IRS audited 0.4 percent of all partnership tax returns in 2013, including partnerships with less than $100m in assets, the agency said. Reuters
