September 10, 2021
Senate Finance Chairman Ron Wyden (D-Ore.) released a “discussion draft” on Friday for legislation that seeks to tighten tax reporting rules for partnerships.
A “discussion draft” is not legislation that is introduced to become law. Instead, it is released for comments from other lawmakers. Wyden could incorporate those comments into the legislation and, at some point in the future, release legislation that he hopes will become law.
It is unclear if Wyden’s proposals will be a part of the $3.5 trillion tax and spending bill that congressional Democrats hope will pass Congress by mid-October. That legislation can pass both chambers with only Democratic support. If the Senator’s proposals are not included in the Democratic package, the odds for these provisions becoming law are slimmer because it would require Republican support, which is unlikely to occur.
What is clear, according to reporting, is the changes that Wyden has proposed would be dramatic.
“If it takes effect, the proposal would upend many existing arrangements in private-equity funds and elsewhere, said Monte Jackel, a partnership tax lawyer and former IRS official who worked with the committee on the plan. He described the changes as the most significant for partnerships since 1984. ‘A lot of people will be aggravated over this,’ Mr. Jackel said,” the Wall Street Journal reported.
The proposed changes in Wyden’s discussion draft includes:
The discussion draft can be found here.
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