Making Tax Law Work: Improvisation and Forgotten Taxpayers in Partnership Tax

48 Pages Posted: 5 May 2021 Last revised: 15 Sep 2021

See all articles by Andrea Monroe

Andrea Monroe

Temple University - James E. Beasley School of Law

Date Written: May 1, 2021


There is a growing awareness that federal tax law caters to a small number of wealthy and well-advised taxpayers without regard for the rest of the taxpaying public, and partnership tax is a prime example. This article explains how complexity and indeterminacy have transformed partnership tax, harming millions of forgotten taxpayers who struggle to comply with their annual filing obligations. A root cause of this phenomenon is the professional culture of elite practitioners, policymakers, and scholars at the heart of the partnership tax system.

The most troublesome provisions of partnership tax are also its most fundamental, namely the allocation rules that regulate how partners share a partnership’s taxable items. Complexity is a universal problem faced by partnerships at all levels of wealth, status and sophistication, and the vast majority of taxpayers respond with improvisational tax compliance. In remarkably diverse contexts, improvisation has replaced technical compliance as the norm in partnership allocations. Wealthy partnerships make a strategic choice to improvise, using “target allocations,” while poorer partnerships improvise because they have no other choice, routinely following “intuitive” tax law and hoping for the best.

Reframing this complexity problem as a shared experience of all partnerships exposes the technical and cultural fractures of partnership tax in a new and different light. First, the technical rules governing partnership allocations do not work as designed for any category of partnership. A second, less explored problem is the professional culture of partnership tax, which takes for granted the technical sophistication of substantive tax law without appreciating the distributional consequences of sustained complexity and improvisation.

Partnership allocations require more than technical solutions. One necessary step is addressing the professional culture of partnership tax to rethink what it means for tax law to work. This article proposes that partnership reforms developed by experts and directed at wealthy and well-advised partnerships should be accompanied by reforms addressing parallel problems faced by forgotten partnerships. The solutions will necessarily differ, but a bilateral focus on the universal problems of all partnerships would represent meaningful progress, signaling a commitment to a fair, principled, and representative system of partnership tax.

Keywords: tax, partnership tax, complexity, partnership allocations, tax improvisation, tax reform, income inequality, tax administration, subchapter K

JEL Classification: K34

Suggested Citation

Monroe, Andrea, Making Tax Law Work: Improvisation and Forgotten Taxpayers in Partnership Tax (May 1, 2021). University of Michigan Journal of Law Reform, Forthcoming, Temple University Legal Studies Research Paper No. 2021-23, Available at SSRN:

Andrea Monroe (Contact Author)

Temple University - James E. Beasley School of Law ( email )

1719 N. Broad Street
Philadelphia, PA 19122
United States

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