The IRS wants to close another major tax loophole for the rich and raise $50 billion in the process.

WASHINGTON (AP) – The IRS plans to close a major tax loophole for wealthy taxpayers that could generate more than $50 billion in revenue over the next decade, the US Treasury Department said.

The guidance and decision announced Monday include plans to essentially end “partnership basis switching” – a process by which a company or individual can move assets between a series of related parties to avoid paying taxes.

Biden administration officials said after assessing the practice that there was no economic basis for these transactions, with Deputy Treasury Secretary Wally Adeyemo calling it “really just a game of typos.” “. Officials said the additional IRS funding provided through the Inflation Reduction Act, 2022 had allowed for increased surveillance and greater awareness of this practice.

“These tax shelters allow wealthy taxpayers to avoid paying what they owe,” said IRS Commissioner Danny Werfel.

Due to underfunding in previous years, the IRS had reduced auditing of wealthy individuals and the transfer of assets between partnerships and businesses became common.

The IRS says filings from large pass-through companies used for the type of tax evasion in the guidelines increased by 70%, from 174,100 in 2010 to 297,400 in 2019. However, audit rates for these companies fell from 3.8% to 0.1% over the same time. frame.

Treasury said in a statement announcing the new guidance that there is an estimated $160 billion gap between what the top 1% of earners likely owe in taxes and what they pay.

Monday’s announcement is part of the IRS’s ongoing effort to focus on high net worth tax evaders who manipulate the tax code or don’t pay their taxes at all.

Initiatives announced over the past year have included prosecuting individuals and companies that improperly deducting personal flights on board business jets and collect tax arrears from delinquent millionaires.

The IRS plans to increase audit rates for businesses with assets over $250 million to 22.6% in 2026, up from 8.8% for tax year 2019. It also plans to increase audit rates tenfold. audit rates on large, complex partnerships with assets greater than $10 million.

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See all of AP’s tax season coverage at https://apnews.com/hub/personal-finance.