A fiduciary’s failure to consider the tax impact of their actions can be the genus for litigation and anticipated tax savings can be the engine that drives a settlement.  It is important to ensure that transfer taxes are minimized for the benefit of their beneficiaries. Tax planning is a key component in determining the best structure for their wealth transfer planning.  Given the importance of transfer taxes, we wanted to highlight a few items from the IRS 2015 Data Book relating to estate and gift tax returns:

Number of Tax Returns filed during 2015

• 36,343 estate tax returns (545 from Colorado)

• 237,706 gift tax returns (4,492 from Colorado)

Amounts Collected

• Estate tax returns  - $17,066,589 collected

• Gift tax returns - $2,052,428 collected

Percentage of 2014 Tax Returns Audited in 2015

• 7.8% of all estate tax returns

  • Gross estate less than $5 million – 2.1% audit rate\

  • Gross estate greater than $5 million but less than $10 million – 16.2% audit rate

  • Gross estate greater than $10 million – 31.6% audit rate

• 0.9% of all gift tax returns

Results of Audits

• 22% of estate tax returns examined had no change

• 34% of gift tax returns examined had no change

• 70 estate tax returns and 135 gift tax returns had unagreed recommended additional tax

• 543 estate tax returns and 43 gift tax returns resulted in tax refunds