The IRS scrutinized estate tax returns more than any category of individual tax returns in tax year 2011, at close to a 30 percent rate of examination, while individual income tax returns with $1 million or more in income saw a slight decline in audit coverage, according to the "2012 Internal Revenue Service Data Book," issued March 25.
Whether it’s Caller I.D. or the return address on an envelope in your mailbox, no one likes to hear from the IRS. While notice of an audit is never good news, it's important to know that audits are not limited to examining the income taxes you've paid (or haven't paid). The IRS is increasingly scrutinizing estate tax return audits which can be especially bad news for taxpayers as this return must be filed within nine months following the death of the loved one who owned the assets subject to the return. Then there's the problem of finding the liquidity to pay those taxes (as we are about to witness in the drama about to play out on Downton Abbey).
With tax season just around the corner, the last thing you might want to hear about are audits of any kind. Nevertheless, the fiscally-minded writers at AccountingWeb want to warn taxpayers about this apparent IRS interest in estate tax returns in an article titled “IRS 2011 Audit Rates Show Estate Tax Returns under the Microscope.” Bottom line: take this as fresh evidence to cross your “t’s” and dot your “i’s” when it comes to your own estate planning.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: Accounting Web (March 27, 2013) “IRS 2011 Audit Rates Show Estate Tax Returns under the Microscope”