A billionaire and media tycoon Sumner Redstone may be forced to pay over $1 million in back taxes over a gift he made to his children in 1972. According to the Internal Revenue Service, Redstone gave stock in his family’s company, National Amusement, to his son and daughter without ever filing an accompanying return. The IRS claims that this means Redstone, who has since go on to accrue a net worth of around $4.9 billion, is subject to $1.1 million in taxes and penalties, as well as interest, for not filing accurate returns.
A former IRS gift and estate tax auditor explained that cases in which returns are not filed are not bound by the normal statute of limitations that would prevent the IRS from collecting on old sums. This makes it important for any Texas taxpayers who have made sizable gifts without filing accurate returns to contact an attorney specializing in tax law to ensure their rights and interests are properly protected.
The former auditor said that while the IRS may be legally allowed to pursue Redstone for the taxes, going back four decades to collect is “unprecedented.” He added that he was surprised the IRS would take action on such an impractical case, contending that the move “sends a really troublesome message to the public.”
Redstone has filed a petition with the U.S. Tax Court denying the IRS’s claim, arguing that the sum classified as a taxable gift by the IRS was actually a transaction designed to a settle a “bitter” intra-family lawsuit. He claims his brother, now deceased, had threatened to sell some of his shares in National Amusement to buyers outside of the Redstone family, an issue that was resolved by transferring them to both brothers’ children.
The IRS declined to comment on the case, but experts say the tax agency may have decided to pursue Sumner Redstone after discovering pertinent information during an audit of his late brother’s estate in 2011.
Source: HeraldNet, “Billionaire Redstone challenges IRS tax claim on 1972 gift” No Author Given, May. 02, 2013