Historically, the Internal Revenue Service focused on auditing corporations. The IRS recently announced that the Agency will be deploying more resources to focus on passthrough entities as a top priority. The focus will include partnerships, S corporations and sole proprietorships, which is nearly 95 percent of all business entities in the U.S.
The IRS has already implemented training programs that will help to increase the skill sets of IRS agents to effectively identify technical and audit issues of partnership entities. Speaking at the AICPA National Tax Conference in Washington, the IRS Small Business/Self Employed Division Commissioner Faris Fink indicated “Frankly, we’re a little bit behind the curve in getting around to developing a partnership strategy.”