The IRS is unrolling a major compliance initiative targeting transfers of real estate between family members for less than full consideration. The goal is to identify taxpayers who failed to file a Form 709 (gift tax return) to report the gift. If the amount of the gift exceeds the annual exclusion (currently $13,000), gift tax returns are required even if the gift itself would not be taxable.
The initiative is focusing on transfer records in 15 states for evidence of property transfers to family members. The current roster of states includes Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington, and Wisconsin. It is expected that the program will expand to other states soon. The IRS is being aggressive with this initiative (it went to court to force the California Board of Equalization to disclose transfer data). Those involved in preparing estate and gift tax returns should counsel their clients of the need to file a Form 709 for intrafamily transfers of real estate for less than full consideration.
Gift Tax form is 709.
Good catch. I made the correction.