John Doe Summons on the California State Board of Equalization

A federal district court judge in California just gave the IRS the green light to conduct a “John Doe” summons on the California State Board of Equalization. The IRS is seeking the names of all the people who transferred property to children or grandchildren from 2005-2010. Some taxpayers made these transfers for little or no money and many did not file tax returns that they were required to.

Any gifts above the $13,000 annual exclusion amount need to be reported to the IRS on a form 709.  The IRS’ Estate and Gift Tax Program has looked into 658 taxpayers who had transferred property to relatives and found that 238 of those taxpayers should have filed a form 709 but did not. Of those 238, twenty taxpayers have to pay extra tax now because they exceeded their $13,000 limit.

Because some of the 58 counties within California did not keep the family transfer data that the government needs, the government will have to get the data directly from the Board of Equalization.

See Janet Novack, Federal Judge Green Lights IRS Search For California Gift Tax Cheats, Forbes, Dec. 18, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.