Tag Archives: IRS

New Estate Tax Rules May Face Opposition from Taxpayers and Their Advisors

The IRS may be heading for a fight with taxpayers as a result of proposed regulations which are meant to limit certain estate and gift tax planning strategies.

The regulations (REG-163-113-02) were issued on August 2nd, and they place restrictions on the use of “valuation discounts” which have the effect of lowering the overall value of assets in family-owned businesses. As a result, the decedent’s estate’s value, and therefore the gift tax liability, are reduced at the time of death. The way the IRS achieves their goal is by disregarding the limitations that allowed taxpayers to use such discounts before.

Principal at Pioneer Wealth Partners’ estate advisory group, Jonathan Blattmachr, foresees that, in terms of authority, the IRS and the Treasury department “will be ‘viciously’ attacked by taxpayers and their advisors.”

Yet the Tax Court could uphold the new regulations. The deference doctrine that was established 30 years ago by the Supreme Court decision of Chevron USA Inc versus Natural Res. Def. Council could be the precedent for upholding the regulations.

Blattmachr added that as far as the elimination of valuation discounts, the proposed regulations “would seem to eliminate minority (or lack of control) discounts for all family ‘controlled’ entities including active businesses.”

IRS Apologizes for Singling Out Right-Wing Groups

Caught Picking on Right-Wing Groups
Caught Picking on Right-Wing Groups

Proving once again that even paranoids can have enemies, the Internal Revenue Service of the United States was caught, and has already apologized for, singling out right-wing groups for extra scrutiny of their tax-exempt status during the 2012 election.

Lois Lerner, the head of the IRS section that overseas tax-exempt organizations, admitted that groups using the words “tea party” or “patriot” on their applications for tax-exempt status were flagged for extra careful checking. In a few instances the groups were asked for their list of financial supporters which is an actual violation of IRS policy most of the time.

“That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate. That’s not how we go about selecting cases for further review,” Lerner said at a conference sponsored by the American Bar Association. “The IRS would like to apologize for that,” she added.