Encino, CA (PRWEB) August 21, 2012
Almost two years ago, toward the end of 2010, the federal government passed a Tax Act that effectively extended the so-called Bush tax cuts. While there were many stipulations to the legislation, its primary goals were threefold: to provide much-needed tax relief to American taxpayers, extend unemployment insurance, and to create jobs for Americans who were witnessing record-level jobless rates since the Great Depression in the 1930s. A healthy-sized chunk of the proposed tax relief came from stipulations in the Tax Code that allowed for gift-tax exemptions and estate-tax rate reductions. However, the 2010 Tax Act was only signed through the end of 2012, and to date there have been no real signs that the legislation will be re-extended beyond 2012, which would significantly alter the landscape of gift and estate taxes.
“So far, the U.S. economy has not seen much benefit from the 2010 Tax Act as a whole,” said Tax Resolution Services, Co., founder and CEO Michael Rozbruch. “That said, the relaxation of estate-tax rates and expansion of gift-tax exemptions are key aspects of the legislation that should be extended beyond this year if we hope to see any economic rebound in the near future. Also, the government is doing a disservice to wealthy Americans who will be heavily impacted depending upon whether the estate and gift tax reductions are extended or not.”
To that end, not knowing the fate of these taxes in 2013 and beyond is creating some anxiety for those wealthy enough to be able to make such decisions. Without knowing the direction the economy will take following the upcoming elections, those who elect to gift their wealth to their heirs now risk the possibility of not having enough to live on in the future—especially those who are young and wealthy. On the flip side, if they elect to hold onto their wealth, then they are facing a significant tax debt increase after this year. And it won’t work to wait until after the election to decide what to do. According to a recent New York Times article, it can take at least three months to properly make a transaction of this size—currently a tax-free annual gift of roughly $5 million can be made without incurring taxes for the donor.
“As the founder of one of the first tax resolution firms who has a team of tax relief specialists, I would highly recommend taking steps now to lock in your estate,” said Rozbruch, “especially if you are inching closer to retirement age or you have children who are in college or have already graduated. Of course, younger people with wealth will have somewhat more challenging decisions to make; however, I would be hard-pressed to advise any client in this income bracket to stand pat with the current gift and estate tax laws. If the Feds allows this bill to expire, it could be a long time before we see these kinds of rates again.”
For more expert analysis of breaking tax news and other financial issues facing the nation, visit Michael Rozbruch’s blog at http://www.taxresolution.com/blog.
About Tax Resolution Services, Co. (TRS)
The tax attorneys, CPAs, EAs, and tax relief professionals at Tax Resolution Services, Co., pioneered the tax resolution industry. They have successfully settled thousands of cases over the past 14 years, and are committed to providing affordable, competitive solutions to businesses and individuals. Got IRS stress? Contact TRS. To find out how TRS can help, or to receive a free tax problem consultation, visit TaxResolution.com or call (888) 851-5894.