Trump proves once again that he is only looking out for his friends by moving to dismantle law that prevents tax evasion

Donald Trump’s administration is moving to revoke a two-year-old Biden-era tax rule designed to crack down on a lucrative tax avoidance loophole. If successful, huge business partnerships won’t have to tell the IRS when they shift assets between their different corporate entities.

These transactions, known as “basis shifting,” have allowed businesses to dodge tens of billions of dollars in taxes, according to past allegations from the Treasury Department. Essentially, companies could depreciate the same asset multiple times, significantly reducing their tax burden. If this proposal goes through, it would remove a key reporting requirement that helped the government spot these maneuvers.

Tax attorney Stuart Rosow is concerned “that people will take this as a substantive conclusion that these transactions are okay.” Rosow and other lawyers who handle complex partnerships had already stopped looking for these transactions to report to the IRS last year, when the Trump administration first hinted at repealing the requirement. 

It seems like they saw what was coming

Multimillion-dollar partnerships and their legal teams have been actively lobbying against this rule ever since the Treasury Department first announced it in 2024. The department estimated that these efforts would raise over $100 billion for the government over the next decade. Attorney Eric Sloan argued that the regulations were extremely difficult to comply with since they “hit so many ordinary, everyday transactions.”

Miles Johnson, who focuses on partnership tax issues at New York University’s Tax Law Center, pointed out that the Trump administration generally aims to deregulate and be pro-business. Johnson noted, “these sorts of transactions, in their worst forms, are pretty abusive.” 

The Biden administration’s original strategy was a three-pronged approach to tackle this issue. With Trump’s latest proposal, published in the Federal Register and requiring public comment before implementation, two of those prongs are now gone. The first was the requirement for businesses to report specific transactions to the IRS, which helped the government detect illegal basis shifting. That’s precisely what Friday’s proposal revokes.

The second prong involved increasing audits of partnerships. Partnerships have absolutely exploded in popularity among the most profitable and complex businesses. The number of partnerships with over $10 million in assets jumped by 70 percent in the 2010s. However, IRS audits plummeted from nearly 4 in every 100 to just 1 in 1,000. Biden hired hundreds of new auditors to resolve this, but under Trump, the IRS workforce has shrunk drastically.

This leaves only the third prong still standing: an IRS ruling that basis shifting is illegal if its sole purpose is tax avoidance. These tax changes need to be a concern for us because of how Trump has been using them for business interests. It has been concerning enough that lawmakers have introduced a Stop Presidential Embezzlement Act. In return, Trump has wasted tax dollars chasing after Biden as a distraction.