The Treasury Inspector General for Tax Administration recently issued a report concerning how estate and gift tax returns are being processed. The report highlights substantial discrepancies in how the IRS handled the examination process. One of the issues covered in the report is that the document used by the IRS to classify gift and estate tax returns in difficult to read and follow. As anyone who has ever read an IRS form can attest, simplicity and clarity are not the driving force behind creating tax documents.
Fair and consistent application
The concerns raised in the report are about treating every taxpayer the same. Estate and gift tax returns that were not established correctly were cited for further review, but not in a predictable or consistent manner. Once a taxpayer makes a mistake, they enter into a shifting maze of IRS policies and actions. There is truly no way to know how these reviews will turn out once a return is flagged.
Do it right the first time
The key, of course, is to make sure your gift taxes and estate taxes are handled correctly the first time. Rather than take a chance on your ability to interpret IRS guidelines that even IRS employees can’t follow, you need to speak to an attorney who understands estate and legacy planning. If you do it right the first time, you can avoid the need for further review under the unpredictable process currently followed by the revenue service.
Taxes play an important role in creating the right estate plan. Only an experienced professional can help you craft a plan to accomplish your goals and minimize the tax burden.
Source: Accounting Today, “IRS faulted on scrutiny of estate and gift tax returns,” by Michael Cohn, 28 September 2017