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:: IRS cutback may mean fewer estate tax audits
IRS cutback may mean fewer estate
tax audits
By Lisa Shidler
August 21, 2006 |
CHICAGO
- Some financial planners and tax lawyers
may change the advice they give on estate
tax issues to high-net-worth clients now
that the Internal Revenue Service is
reducing the number of agents who enforce
the taxes.
The Bush administration recently said it
planned to cut 157 of the IRS' 345 estate
tax lawyers and support staff. Some industry
observers believe this is a backdoor move
for President Bush to reduce the estate tax
on his own. A recent bill to repeal the
estate tax was rejected by Congress.
Industry leaders believe the decision likely
will lead to fewer audits.
Joe Dolan, a tax lawyer and certified public
accountant, says of the cutback, "It may
cause me to be more aggressive in taking a
position on an estate tax return in the
future." Mr. Dolan is tax lawyer at Porzio
Bromberg & Newman PC in Morristown, N.J.
Others fear the Bush administration's
decision is effectively eliminating the tax,
even though lawmakers didn't vote to repeal
it.
"I'm concerned, because it seems like it's
prejudging the outcome of the legislative
battle on whether to keep the estate tax or
not," said Lee Farris, a senior organizer on
estate tax policy, with United for a Fair
Economy, a Boston-based national non-profit
agency of business people, investors and
affluent Americans. The agency supports
keeping the federal estate tax.
Alvin Brown, a former IRS lawyer, said the
amount of money the IRS could recoup from
estate audits if it were fully staffed is
substantial. He used to work for the IRS in
California in the 1960s and says he knows
firsthand how wealthy individuals can
manipulate land values and other complex
issues.
Mr. Brown said that in many cases he would
uncover thousands of dollars simply because
people would grossly undervalue their land.
"There's so much money," for the government,
he said. "Why would they want to forgo
revenue that could be raised except for a
political reason," Mr. Brown asked.
Mr. Brown now fights the IRS as a tax lawyer
with Alvin Brown & Associates LLC,
based in Washington. "The president
shouldn't go through the back door," Mr.
Brown said. "It's an ugly precedent."
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