April 06, 2023

Senators Warren, Van Hollen, Sanders, Whitehouse Secure Ruling from IRS to Crack Down on Abuse of Trusts to Dodge Taxes, Urge Further Actions

Ruling from IRS (PDF)

Washington, D.C. – Following a letter from U.S. Senators Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), Bernie Sanders (I-Vt.), and Sheldon Whitehouse (D-R.I.), the Internal Revenue Service (IRS) issued a ruling to crack down on a loophole that helps the ultra-wealthy dodge taxes. 

Last month, the senators wrote to Treasury Secretary Janet Yellen, raising concerns that the wealthiest millionaires and billionaires use increasingly complex tax planning to exploit trusts and avoid paying taxes, including through Intentionally Defective Grantor Trusts (IDGTs). The lawmakers urged Secretary Janet Yellen to use the full extent of the Department’s regulatory authority to crack down on the use of trusts to dodge paying their fair share in taxes. 

“I applaud this action from Treasury to crack down on the IDGT loophole that has been helping the super wealthy dodge taxes – but there is much more that the Department can and should do,” said Senator Elizabeth Warren. “Along with Senators Van Hollen, Whitehouse, and Sanders, I’ll keep pushing for a tax system that makes the wealthy pay their fair share.”

“This action from the Treasury Department is an important step in ensuring wealthy tax cheats pay their fair share in supporting prosperity for all. While there’s more to do, this ruling will close a loophole that would have allowed the ultra-wealthy to get away without paying what they already owe, leaving everyday Americans to foot the bill,” said Senator Chris Van Hollen.

Senator Warren has led the fight for a fairer tax system – making it easier and cheaper for normal taxpayers to file their taxes and making sure the ultra-wealthy and corporations pay their fair share: 

  • On March 20, Senators Warren, Van Hollen, Sanders, and Whitehouse sent a letter to Treasury Secretary Janet Yellen, urging her to use the full extent of the Treasury Department’s regulatory authority to crack down on the ultra-wealthy’s use of trusts to dodge paying their fair share in taxes.
  • In March 2023, Senators Warren and Angus King (I-Maine) wrote a letter with 19 other senators to the Internal Revenue Service and Secretary Yellen expressing strong support for Secretary Yellen’s directive for the IRS not to raise audit rates for small businesses or households making under $400,000 annually. 
  • In July 2022, Senator Warren led 22 of her colleagues in introducing the Tax Filing Simplification Act of 2022 to simplify the tax filing process for millions of Americans by lowering costs, eliminating red tape for all taxpayers, and saving them hours and hundreds of dollars. 
  • During an exchange of the United States Senate Finance Committee in June 2022, U.S. Treasury Secretary Janet Yellen agreed with Senator Warren on the need to create a free tax filing system that actually works for Americans. 
  • In April 2022, Senator Warren and Representatives Sherman and Porter sent a letter to Intuit regarding the company’s unethical use of the revolving door to hire former regulators to defend their shady business practices that scam taxpayers out of billions of dollars. 
  • In April 2022, Senator Warren and Representative Judy Chu (D-Calif.) sent a letter to Secretary Yellen and IRS Commissioner Charles Rettig expressing concerns about higher IRS tax audit rates for low-income Americans. The lawmakers called on the IRS to cease this unfair practice and asked for information regarding their audit rates on low-income Americans and their plans to make the audit data accessible to the public. 
  • In February 2022, Senator Warren and Representative Pramilla Jayapal (D-Wash.) sent a letter to the Acting Inspector General of the Department of Treasury and the Treasury Inspector General for Tax Administration, calling on them to open an investigation into the unethical revolving door between the world’s largest accounting firms and the Treasury Department and IRS. 
  • In May 2021, Senator Elizabeth Warren introduced the Restoring the IRS Act of 2021, which would provide the IRS with the resources it needs to go after wealthy tax cheats and close the tax gap.