Discussion:Do gift tax returns get audited?
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| The relief trilogy under the 1997 Act, effective for gifts made after August 5, 1997, included (i) addition of a new section 2001(f) to deny revaluation for estate tax purposes of all gifts adequately disclosed on a gift tax return once the gift tax statute of limitations has run, (ii) amendment of section 2504(c) to drop the requirement that a current gift tax must have been paid to achieve this finality of valuation, (extending the finality of valuation provided by that statute to gifts that merely use some or all of the donor’s unified credit) and (iii) the addition of section 7477 to empower the Tax Court to issue declaratory judgments regarding the value of gifts, including use of the unified credit, if the donor has first exhausted the available administrative remedies with the Service. | The relief trilogy under the 1997 Act, effective for gifts made after August 5, 1997, included (i) addition of a new section 2001(f) to deny revaluation for estate tax purposes of all gifts adequately disclosed on a gift tax return once the gift tax statute of limitations has run, (ii) amendment of section 2504(c) to drop the requirement that a current gift tax must have been paid to achieve this finality of valuation, (extending the finality of valuation provided by that statute to gifts that merely use some or all of the donor’s unified credit) and (iii) the addition of section 7477 to empower the Tax Court to issue declaratory judgments regarding the value of gifts, including use of the unified credit, if the donor has first exhausted the available administrative remedies with the Service. | ||
| - | §7477 as I understand it gives the taxpayer access to Tax Court even if there is no tax due.}} | + | §7477 as I understand it gives the taxpayer access to Tax Court even if there is no tax due. |
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| + | Procedure—Petitioning Tax Court on Gift Tax Value: Final regulations under IRC Sec. 7477 (see TD 9460) explain when donors can petition the Tax Court for a determination of the value of a gift. To be eligible for a declaratory judgment by the Tax Court, the donor must have exhausted all administrative remedies by fully participating in the Appeals process. The final regulations state that full participation requires timely submission of requested information and disclosure of all relevant information, and clarify when the donor will be treated as having exhausted all administrative remedies if Appeals does not grant the donor's request for a conference. Reg. 301.7477-1. | ||
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Revision as of 01:45, 6 November 2009
Discussion Forum Index --> Basic Tax Questions --> Do gift tax returns get audited?
Discussion Forum Index --> Tax Questions --> Do gift tax returns get audited?
| 6 November 2009 | |
| An accountant I met today who has been practicing for 30 years or something said he has never had a gift tax return audited. I was pretty surprised to hear this. I don't do taxes, but I do perform business valuations, so I am interested in knowing whether other CPAs have similar experience (not getting audited) with gift tax returns, particularly when valuation discounts are applied to the gift. | |
| 6 November 2009 | |
| Yes, the IRS does audit gift tax returns, particularly if discounts were taken in arriving at the fair market value of the gifts and if adjustment of the discounts would result in additional gift tax. I have represented a few taxpayers in these audits.
The IRS recently issued T.D. 9460 (10/27/09), which revised Treas. Reg. 301.7477-1. This regulation provides that if the IRS’s proposed adjustment to a gift tax return will not result in any additional liability for gift tax, then under certain conditions the IRS can use the declaratory judgment procedure under IRC §7477. | |
| 6 November 2009 | |
| My understanding is quite different.
The relief trilogy under the 1997 Act, effective for gifts made after August 5, 1997, included (i) addition of a new section 2001(f) to deny revaluation for estate tax purposes of all gifts adequately disclosed on a gift tax return once the gift tax statute of limitations has run, (ii) amendment of section 2504(c) to drop the requirement that a current gift tax must have been paid to achieve this finality of valuation, (extending the finality of valuation provided by that statute to gifts that merely use some or all of the donor’s unified credit) and (iii) the addition of section 7477 to empower the Tax Court to issue declaratory judgments regarding the value of gifts, including use of the unified credit, if the donor has first exhausted the available administrative remedies with the Service. §7477 as I understand it gives the taxpayer access to Tax Court even if there is no tax due. Procedure—Petitioning Tax Court on Gift Tax Value: Final regulations under IRC Sec. 7477 (see TD 9460) explain when donors can petition the Tax Court for a determination of the value of a gift. To be eligible for a declaratory judgment by the Tax Court, the donor must have exhausted all administrative remedies by fully participating in the Appeals process. The final regulations state that full participation requires timely submission of requested information and disclosure of all relevant information, and clarify when the donor will be treated as having exhausted all administrative remedies if Appeals does not grant the donor's request for a conference. Reg. 301.7477-1. | |
