Robert Kovacev discussed the recent Internal Revenue Service's (IRS) proposed rules targeting "abusive" basis-shifting transactions that aim to increase regulatory oversight on high net-worth clients and their advisors, including tax and deal lawyers. These transactions involve manipulating the tax basis of assets within partnerships to generate tax benefits. "We know there are initiatives against large corporations and especially large partnerships because over the last 10 years or so, they've had a low audit rate compared to other types of taxpayers," Kovacev said. He added a goal behind the IRS's collection of information on "material advisers" is to keep tabs on the most prolific promoters of transactions the agency considers abusive. However, the regulatory landscape is uncertain due to the Supreme Court's ruling overturning Chevron deference, which historically favored agency interpretations like those of the IRS. This ruling complicates future IRS rulemaking and enforcement, potentially leading to more challenges and varied interpretations in court. "Now, the rule is courts have to exercise independent judgment, analyze it the way they would analyze any statutes and look at regulation and analyze if that's within what was delegated by Congress for the IRS," Kovacev noted. "That's a much tougher standard for the IRS to meet."