The Internal Revenue Service has a low-profile but sweeping effort under way to use state land-transfer records for evidence of omissions in reporting gifts of real estate to family members. The IRS state and federal gift-and-estate tax program is finding people who haven’t filed Form 709 to report U.S. gift and generation-skipping transfer taxes to the IRS.
New tax rules have made big gifts to family members popular this year, as Congress raised the limit on how much a person can give in a lifetime to $5 million without having to pay gift tax. Still, any time a gift to one person exceeds $13,000, the giver is supposed to let the agency know in a filing of Form 709. Previous gift limits still apply to the time period in which they were in place.
In the previous two years, 323 taxpayers have been examined for failing to report possible gifts. Another 217 are being examined and 250 more were being considered for review. So far, 97 had failed to report gifts on Form 709. Twelve cases resulted in taxes or penalties because a gift put the donor over the $1 million lifetime gift credit that applied at the time.
States that have handed over information on gift-like transactions are Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin, according to the document. The IRS examined a sampling of data from these states and reported that it showed an extremely high failure-to-report rate.
Taxpayers need to be aware that there are no special exceptions to the rules when making a transfer to a family member, even if they get money from the payday loans guide on punchdebtintheface.com. If the property is valued at more than $13,000, a gift-tax return must be filed. Even if the transfer falls within a lifetime exemption amount—currently $5 million—it must be reported to the federal government using Form 709.