Taxpayers have been on the receiving end of a good deal of pain in the last few years over income tax shelters. Much of that pain is well deserved–many of these “investors” (cough, cough) left common sense in their other pockets when they went shopping. And don’t get me started on the purveyors of these schemes.
But I digress.
I know you’ll be shocked to hear this, but there are tax shelter schemes in the estate tax world as well. People don’t want to pay estate tax just as much as they don’t want to pay income tax. (Maybe more–to pay estate tax you have to DIE, after all. Income tax means you’re still alive, at least.)
Well, we have a warning that the the IRS is going to crank up the pain machine for estate tax shelter schemes.
Here’s an excerpt from today’s Tax Notes Today, letting us all know that the IRS will be looking at taxpayers going for estate tax savings via gimmicky and questionable schemes.
At the American Institute of Certified Public Accountants conference on November 1 and 2, a Treasury official warned practitioners to expect a continued crackdown on many of the mechanisms being used to reduce estate tax liability, particularly those involving charities.
“A lot of that has to do with various charitable kinds of gifts, and the potential abuse of exempt organizations,” said Catherine V. Hughes, estate and gift tax attorney-advisor in Treasury’s Office of Tax Policy.
Hughes said the returns of exempt organizations from 2000 would be examined during 2004 and 2005.
“Part of the reason for this initiative actually came from pressure from the Hill,” she said. The Senate Finance Committee over the last year held both a hearing and a roundtable session to examine tax evasion in the charitable arena.
“The Hill has been looking hard at the issue of compensation,” Hughes said. Accordingly, the IRS will be paying special attention to questionable compensation for employees of exempt organizations, she said.
The Senate Finance Committee will continue looking into legislative fixes as well, she said, “no matter who wins the election.”