Journal of Accountancy (AICPA & CIMA)

IRS Watchdog Cites Resource Limits, Duplication in Partnership Audits

The Treasury Inspector General for Tax Administration (TIGTA) reported that limited resources and duplicated review steps have crippled the IRS’s partnership audit initiatives. A soft‑letter campaign to 483 large partnerships generated few usable responses, and the Large Partnership Compliance program examined only a fraction of the biggest entities, with 92% of closed cases resulting in no changes. Funding from the Inflation Reduction Act was slashed by $41.8 billion, prompting a 20% staff cut and driving examination rates for large partnerships from 2.7% to under 0.1%. The IRS now plans to deploy AI‑driven risk models to broaden coverage despite these constraints.