Republicans Call on IRS to Nix Guidance on Economic Substance

House Ways and Means Committee Republicans are calling on the IRS to withdraw guidance that broadened the agency’s ability to apply the economic substance doctrine in audits of related-party partnerships.

Revenue Ruling 2024-14 expands the IRS’s ability to use the doctrine well beyond what was intended in the law, causing conflicts with other parts of the tax code and effectively allowing the agency to treat it as a general anti-abuse rule, 20 of the panel’s 26 GOP members told Commissioner Billy Long in a letter Wednesday.

General anti-abuse rules are used in some countries to let ...