U.S. Sen. Elizabeth Warren (D-MA) is urging the Internal Revenue Service (IRS) to increase its scrutiny of Real Estate Investment Trusts (REITs).
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Last week, the IRS issued a warning about hotel and health care REITs pushing the boundaries of tax law, saying such violations could result in loss of their special tax status.
In a letter to IRS Commissioner Danny Werfel, Warren applauded the IRS’ recent statement and clarification but urged the agency to increase its scrutiny of the potential abuse of REIT tax breaks.
“Under the tax code, REITs can take advantage of lucrative tax breaks – including avoiding the 21 percent corporate income tax and qualifying for the 20 percent pass-through deduction for investors. REITs are supposed to be passive investment opportunities for smaller-scale investors …(but) REITs in the health care and hotel industries may be violating these tax rules,” Warren wrote to Werfel.
Warren cited some examples where she said REITs have had a negative impact.