IRS Commissioner Daniel Werfel testifies before the Senate Finance Committee on April 19, 2023.
The tax gap, or the difference between taxes owed and paid, was an estimated $688 billion for tax year 2021, the IRS reported in October.
Instead, profits flow through to the business owners' tax returns.
Other 'red flags' for higher earnersIn addition to complex partnerships, the IRS is watching for other "red flags" from higher earners, according to Hylton.
Another area of for increased audits could be estate and gift tax returns, particularly those using "aggressive valuation discounts" for assets, Hylton said.
Persons:
Daniel Werfel, Chip Somodevilla, Danny Werfel, Werfel, Eric Hylton, Hylton, Colin Walsh, Baker Tilly, Baker
Organizations:
Senate, IRS, Alliantgroup
Locations:
U.S, Hylton, Puerto Rico