White House Releases New Tax Proposal Regarding Estate and Gift Taxes

Courtesy of NAEA’s E@lert www.naea.org

The plan would require “consistent valuation [of property] for transfer and income tax purposes.” According to the White House, the estate and gift tax provisions would raise $24.2 billion over ten years. Taxpayers would be obligated to report the same cost basis for inherited property for the purposes of both §1014 and the estate tax (or §1015 and the gift tax in the case of gifts). Estate executors would face new reporting requirements. Other provisions dealing with estates and trusts would create a new type of disregarded restrictions under §2704(b) to limit taxpayers’ ability to discount the value of inherited property, and they would set a 10-year minimum term for grantor retained annuity trusts established after the date of enactment.

The administration’s proposal would also:

  • —require e-filing for all corporations and partnerships that file a Schedule M-3;
  • —clarify rules governing professional employer organizations and their liability for federal employment taxes;
  • —make it easier for the IRS to collect court-ordered criminal restitution payments by treating such payments as tax debt;
  • —allow the IRS to use the National Directory of New Hires, a database maintained by the Department of Health and Human Services, for tax administration purposes;
  • —make repeated, willful failure to file a tax return a felony;
  • —allow IRS to require tax return preparers to e-file (if they file at least 100 returns per year);
  • —extend the statute of limitations in cases in which state or local tax changes affect federal tax liabilities;
  • —permit Treasury and IRS employees involved in civil or criminal investigations to give basic information about themselves and their investigation to third parties;
  • —impose a $25,000 penalty for corporations ($5,000 for nonprofit organizations) that do not comply with e-filing requirements;
  • —and extend the penalty for bad checks to electronic checks and other forms of payment.

Now which, if any, of these provisions become law is up to the tax writing committees. (The Administration does not make law; Congress does.) E@lert hasn’t heard much opposition from the Hill, though, and expects that many of these do in fact make it into the ever-growing tax code.

Leave a Reply