Mark J. Mazur
the U.S. Department of the Treasury announced a new regulatory proposal to
close a tax loophole that certain taxpayers have long used to understate the fair
market value of their assets for estate and gift tax purposes.
and gift taxes, or transfer taxes, are taxes on the transfer of assets from one
person to another either by gift during his or her lifetime or by inheritance
at death. Only transfers by an
individual or their estate in excess of $5.45 million are subject to tax. For married couples, no tax is collected on
the first $10.9 million transferred. These generous exemption amounts mean that fewer than 10,000 of the
largest estates are subject to any transfer tax at all in a year.
common for wealthy taxpayers and their advisors to use certain aggressive tax
planning tactics to artificially lower the taxable value of their transferred
assets. By taking advantage of these
tactics, certain taxpayers or their estates owning closely held businesses or
other entities can end up paying less than they should in estate or gift taxes.
Treasury’s action will significantly
reduce the ability of these taxpayers and their estates to use such techniques
solely for the purpose of lowering their estate and gift taxes. These proposed regulations are subject to a
90-day public comment period. The
regulations themselves will not go into effect until the comments are carefully
considered and then 30 days after the regulations are finalized.
the proposed regulations here.
Mark Mazur currently serves as the Assistant Secretary for Tax Policy at the U.S. Department of the Treasury.