IRS Program to Sniff Out Gift Tax Cheats!
Sep 29, 2011
It appears that the IRS is initiating a program to sniff out gift tax cheaters who are not properly filing their gift tax returns.
The IRS estimates that between 60% and 90% of taxpayers who transfer real estate for little or no consideration to family members fail to file form 709 to report the gift.
The IRS is now checking real estate transfer records for 15 states: Conn., Fla., Hawaii, Nebraska, NH, NJ, NY, NC, Ohio, PA, Texas, VA, WA, and Wisconsin. So far, over 500 taxpayers have been audited and many more are lined up for audit.
It appears that the California State Board of Equalization would not freely disclose their data, so the IRS went to court to make them comply.
Remember, even if the gift is not taxable, if it exceeds $13,000 to any one person in a year, you are required to file a gift tax return on form 709. If you feel like this may apply to a real estate transfer you have made, make sure to check with your tax advisor.
We would expect more states to provide this information soon.