Estate planning practitioners sometimes need to request a transcript of a client’s gift or estate tax return. James Dougherty of Dungey Dougherty PLLC gives these examples of when this might be necessary:
- An attorney takes on a new client who doesn’t remember whether they filed a gift tax return, or the new client had a prior advisor who didn’t keep good records.
- An attorney is representing an executor of an estate who, under Internal Revenue Code Section 2204(d), in good faith needs to rely on prior filed returns to report what lifetime gifts were made.
- An attorney needs the transcript of an estate tax return to find out what was reported on the portability amount of a prior return (although this doesn’t come up too often).
(Note that in the above examples, the practitioner would likely prefer copies of the returns themselves but might request a transcript as a first step or if a copy was unavailable).
Some attorneys may be concerned that by requesting a transcript, they’ll attract the attention of the Internal Revenue Service, which will then audit their client’s return. Not so, according to a recent article in Tax Notes. The article quotes Lisa M. Piehl, estate and gift tax policy manager, IRS Small Business/Self-Employed Division, who spoke at an American Bar Association Section of Taxation meeting on Oct. 14, and assured those present that a request for a transcript or status update won’t affect the likelihood that the IRS will audit the returns that are the basis of the request.
Dougherty’s own experience reflects the trust of Piehl’s assertion. He’s never seen an audit occur as a result of a transcript request.