March 29, 2012
Authored by: Kathy Sherby and Stephanie Moll
The Service has recently issued two memoranda, IRS SBSE Memorandum, SBSE-04-1211-101 and IRS SBSE Memorandum, SBSE-04-1211-103, to provide interim guidance for the Internal Revenue Manual concerning Gift Tax Examinations, specifically providing guidance concerning identifying prior previously undisclosed gifts.
Will an Audit of One Gift Tax Return Lead to an Audit of All Gift Tax Returns?
Memorandum 103 states that the examiner is now responsible for requesting a transcript of all prior gift tax returns that the taxpayer has filed with the IRS, and for obtaining copies of all such returns from the Service Center where the return was filed, from the C-Site in Kansas City, Missouri, prior to starting the examination, or from the taxpayer once the examination has commenced. The examiner is then to determine the statute of limitations for each gift tax return, and to “probe for undisclosed transfers.” These new IRM instructions would