NU Online News Service, July 22, 2003, 5:47 p.m. EDT – The Internal Revenue Service has published final regulations that explain how it will treat delays in recoveries of gift taxes or failures to exercise recovery rights.
The final regulations will affect donee spouses who make lifetime dispositions of all or part of a qualifying interest in qualified terminable interest property, the IRS says.
The IRS suggested in a proposed regulation published in July 2002 that it would treat delays as interest-free loans, which could lead to accounting headaches for taxpayers who were slow to make recoveries.
Some tax experts had recommended that the IRS give taxpayers a 30-day "safe harbor" to ease administrative burdens on taxpayers who fail to exercise their recovery rights immediately.