The Internal Revenue Service has launched a low-profile effort to stamp out the illegal gifting of property, according to the Wall Street Journal. A court document with the IRS filing revealed that Josephine Boffanini, coordinator of the IRS federal gift-and-estate tax program, is searching for people who have failed to file a form 709 to report U.S. gift and generation-skipping transfer taxes, using state land-transfer record as evidence of omissions.
In the past two years, 323 taxpayers have been investigated for failing to report possible gifts. Another 217 were under examination and 250 were being considered for review, according to the document, dated Dec.31 2010. Twelve cases ended in tax penalties because a gift put the donor over their $1 million legal lifetime gift credit.
New tax rules instigated this year have raised that limit to $5 million, making property gifting extremely popular. Still though, any time a gift exceeds $13,000, it must be filed with the IRS.
Some states, including New York, have freely handed over records to the IRS. Boffanini says failure-to-report rates are extremely high. There’s a noncompliance rate of 60 percent in Connecticut and a shocking 90 percent in Florida. [WSJ]