Haefele Flanagan

 

 The Haefele Flanagan Newsletter

January 2012

  

IRS Cracks Down on Gift Tax Cheats 

 

The IRS is working on a major compliance initiative to find gift tax cheats. It estimates that between 60% and 90% of taxpayers who transfer real estate for little or no consideration to family members fail to report the gift.

 

To begin with, the IRS is checking transfer records from 15 states: Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington, and Wisconsin.

 

So far, over 500 people have been audited or are under examination and many more are to come. To get an understanding of how serious the IRS is about this matter, one should look to California as an example. The California Board of Equalization wouldn't freely disclose the data so the IRS took them to court to try and make the state comply. Initially the courts turned down the IRS's request, but they have since reversed their decision and have told California to give the information over to the IRS.

 

Even if gift tax isn't due on a real estate transfer, a return still has to be filed with the IRS is the amount of the gift exceeds the gift tax annual exclusion, which is currently $13,000.

 

If you have any questions or would like more information, please contact John Kearsley at 856-722-5300 ext. 302.

 

 

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