In a significant policy reversal, the Treasury Department and the IRS announced plans to remove the recently enacted reporting requirements related to partnership related-party basis-shifting transactions. According to Notice 2025-23, published on April 17, the government intends to issue proposed regulations to remove the final rules established by the Biden administration (T.D. 10028) that classified these basis adjustments as reportable transactions, triggering significant disclosure obligations.
As a result, the IRS will waive penalties under Internal Revenue Code §§6707A(a), 6707(a), and 6708 associated with noncompliance in disclosure or list maintenance required by the repealed regulations.
Additionally, the Treasury Department and the IRS will withdraw Notice 2024-54, which outlined future proposed regulations to restrict or eliminate tax benefits from these transactions.
This policy shift aligns with President Trump’s February 2025 executive order instructing federal agencies to review existing regulations.
If you want to know more about how these changes affect you, please call our team at (410) 497-5947 or fill out our contact form.
Glen Frost’s Takeaways:
This swift backtrack by the Treasury and the IRS on the new partnership reporting rules is a noteworthy development. It signals a responsiveness to concerns about the complexity and burden these regulations placed on partnerships. This reversal offers immediate relief from significant compliance hurdles.
- The IRS is scrapping the recently implemented reporting requirements for partnership related-party basis-shifting transactions.
- Penalties for not complying with these now-defunct disclosure rules will be waived.
- Plans for future, potentially restrictive regulations in this area have also been withdrawn.
This move, seemingly influenced by a recent executive order, highlights the dynamic nature of tax law and how policy shifts can directly impact compliance obligations. It’s a welcome change that simplifies matters for many in the partnership arena.
