Can a late gift tax return for previous years be filed, without penalty, when no gift tax is owed?

Forum|Forum|6 years ago
September 6, 2019
3 replies
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Each of the two gift tax returns is well below the LIFETIME exclusion at the time each gift was made (estimated combined exclusion would be under $800,000). No skip persons involved. They both would be simple returns of gifted real estate.

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Best answer by Anonymous_

There is technically no actual dollar penalty for filing a gift tax return late unless gift tax is due (although leave it to the IRS to try to assess something).

However, filing a return starts the running of the 3-year time period for the IRS to challenge the valuation(s) reported on the return (if you never file the statute never begins to run). Also, although probably irrelevant here, you lose the ability to allocate the GST exemption on a late file gift tax return based on its value on the date of the transfer.

Anonymous_Answer

Employee

There is technically no actual dollar penalty for filing a gift tax return late unless gift tax is due (although leave it to the IRS to try to assess something).

Anonymous

In the case of a failure to file a return of tax imposed by chapter 1 within 60 days of the date prescribed for filing of such return (determined with regard to any extensions of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, the addition to tax under paragraph (1) shall not be less than the lesser of $205 or 100 percent of the amount required to be shown as tax on such return

Anonymous_

Employee

@12309 wrote:

(1) shall not be less than the lesser of $205 or 100 percent of the amount required to be shown as tax on such return

Yes, according to Section 6651 it is the lesser of $205 and 100% of the amount required to be shown as tax on the return. So, in this case, the lesser of $205 or 100% of $0 would be $0 - or am I missing something?

eyeballjames

So did you end up filing late gift tax return? If yes, then how did you do it? Do you simply use the current 2019 form 709 and put the older dates on schedule A?

Anonymous_

Employee

@eyeballjames There is no penalty for late filing a gift tax return (Form 709) if no tax is due.

The reference to a "minimum penalty" for failure to file applies to income tax returns (Section 61), not gift tax returns, which are addressed in Section 2501.

eyeballjames

Thank you for replying.

So I could use the current 2019 form 709 for both 2018 and 2018 gifts?

Antpaulm

So you guys are actually saying you can gift 800,000 k without getting penalized from the IRS? I thought Form 709 always had to be sent in? Won't they come after you if there is a willingness to not file or if you get audited?