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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28906
Experience:  Taxes, Immigration, Labor Relations
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In the years 2000 to 2005, taxpayer made sizable gifts to children.

Customer Question

In the years 2000 to 2005, taxpayer made sizable gifts to children. All of the gifts were reported on timely filed gift tax returns. Taxpayer changed accountants in 2006 and continued to make annual gifts to children. The new accountant prepared gift tax returns for years 2006 to 2013, but was not aware of the prior gifts. As a result, the gifts from 2000 to 2005 were not reported on any subsequent gift tax return. How should this error be corrected? By filing amended gift tax returns? If so, does that re-open the statute of limitations period for auditing prior returns?
Thanks in advance for your help!
Steve Kane
*****@******.***
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
Hi and welcome to our site!
Correction should be done by filing amended tax returns - that is the only way to make corrections.
However - if there were NO additional tax liability because of these corrections - corrections are not required. In this case - for instance - if there is additional gift tax return in 2014 - it may be corrected with all missing information - and you may attach a note with explanation of facts.
If missed information resulted additional gift tax liability - then amendments are required.
Regarding the statute of limitations - there is NO statute of limitations to audit - but the statute of limitations affects the IRS ability to assess additional tax liability.
In general, the filing of an amended return by a taxpayer does not extend the statute of limitations on assessment. If an amended return is received within 60 days from when the Assessment Statute Expiration Date would otherwise expire, a period of 60 days from the received date is allowed for the assessment of the additional amount of tax on that return imposed by Subtitle A (income tax). IRC Section 6501(c)(7). For example, if an amended income tax return for the 2003 tax year was received on April 9, 2007, you would have 60 days from that date to assess the additional amount of tax on that income tax return.
See here
http://www.irs.gov/irm/part25/irm_25-006-001r-cont01.html
The tax may be assessed within 6 years after the original return was filed (IRC Section 6501(e)(1)), if the taxpayer omits:
•Gifts in excess of 25% of the total gifts on original Form 709 (IRC Section 6501(e)(2))
If you still have any doubts, need clarification - please be sure to ask.
I am here to help you will all tax related issues.
Expert:  Lev replied 1 year ago.
I appreciate if you take a moment to rate my answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you will all tax related issues.