We frequently represent taxpayers before the Internal Revenue Service (“IRS”) in all types of civil and criminal tax controversies. It is now being widely reported that the IRS has instituted a new gift tax compliance initiative, which is designed to respond to its suspicions of widespread failure to file gift tax returns. According to the IRS Federal/State Coordinator for Estate & Gift Taxes, Josephine Bonaffini, between sixty percent and ninety percent of taxpayers fail to file a gift tax return despite having engaged in a transaction requiring a return. According to Bonaffini, in the past two years, 323 taxpayers have been audited for failure to file gift tax returns relating to gifts of real property, 217 cases were still under examination, and another 250 cases were being researched to determine whether to conduct gift tax audits. At the time, the IRS had determined that ninety-seven taxpayers had violated gift tax reporting requirements by failing to file, and just twelve cases resulted in assessment of tax and penalties.
Historically speaking, gift tax audits are historically rare, yet the same statutory regime that governs sanctions for the failure to file income tax and most other returns also governs sanctions for failure to file gift tax returns, and Code Section 7203 criminalizes the willful failure to file a return, and this section has been applied to gift tax returns, albeit infrequently.
The Connecticut Department of Revenue Services (“DRS”) began reviewing the conveyance tax returns and comparing it to the gift tax returns filed to identify unfiled gift tax returns some years ago, so this comes as no surprise.
So whether you live in Stamford, Connecticut or elsewhere, if any issue arises for unfiled gift tax returns or any other IRS issue, please feel free to contact me at (203) 602-5550 or by email at egreen@convicerpercy.com
Eric L. Green, Esq.
Convicer, Percy & Green, LLP
60 Long Ridge Road, Suite 202
Stamford, CT 06902
Ph. (203) 602-5550
Fax (203) 286-1311
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