Trust Updates Archive
(April 21, 2015 --Chicago, IL) -- Total taxes owed following trust, estate, and gift tax (TEG) audits in 2014 were greater than those collected in any of the prior five years -- excluding 2013, which was an anomaly. Total additional taxes owed on TEG returns in 2014 were nearly $2.2 billion.
Though the total number of TEG returns filed has fluctuated since 2007, the error rate on returns selected for an IRS audit has remained fairly constant year over year; that's the good news.
The bad news is that average additional taxes owed on audited returns continue to increase. Over the last few years, IRS focus seems to have been on estates, specifically large estates, those over $10 million. In 2014, the focus expanded to gift tax returns and to smaller estates.
In 2014, additional taxes owed on gift tax returns accounted for 61 percent of total TEG additional tax paid. This is more than double the next highest rate, which was seen last year: 26 percent.
While the total additional taxes paid by estates declined, this reflects lower taxes owed by large estates.
The average adjustment paid by small estates, those under $5 million, was more than double that paid last year and the highest paid over the last seven years.
Taxes owed by midsized estates, those between $5 million and $10 million, was up nearly 50 percent over the prior year and the highest since the IRS began reporting the category five years ago.
The IRS declines to comment on what drives spikes in tax revenue. However, a spokesman insisted the agency was not "targeting" TEG returns, adding that "many factors" can result in variations year over year.
TEG returns include the forms 1041 (trust or fiduciary return), 706 (estate tax return), and 709 (gift tax return).
Given how lucrative TEG returns are for the IRS, it is reasonable to expect that audit scrutiny of these tax returns will continue.
For more detailed information on TEG audits, see the current issue of Trust Regulatory News.
Trust Performance Report -- annual data book, published in May, provides both industry and peer group performance data by assets, gross revenue, net income, and account category. Subscribers receive quarterly updates. TPR findings are based on its annual survey of the top 1500 fiduciary institutions. For more best practices and benchmark data see TPR. For information on ordering click here or the link below.
Fiduciary Earnings & Expenses -- annual data book comparing performance among independent trust companies to that of OCC national trust companies and to bank trust divisions. For information on ordering click here or the link below.
No statement in this issue is offered as or should be construed as legal opinion or advice or as an indicator of future performance.
To subscribe to Trust Updates or for a trial subscription go to
To unsubscribe to Trust Updates go to
To subscribe, click on the link below :
• Trust Regulatory News
• Trust Performance Report or
• Fiduciary Earnings & Expenses
Subscription request can also be sent to "email@example.com"
or by calling 800-404-2116.
• 1992-2015 Copyright© A.M. Publishing, Inc., Trust Regulatory News