Tax Blog

In the last two weeks, various news sources have reported on a previously low-profile IRS initiative to use state land-transfer records to identify potential omissions in reporting gifts of real estate.  (Via TaxProf here and the WSJ here.)  According to the reports, the IRS is using information received from at least 16 states to identify transfers of real estate the value of which exceeded the $13,000 threshold for filing a gift tax return.  As a result, the IRS is pursuing taxpayers who made such transfers but failed to file returns.

Although this particular example of the IRS building an enforcement case through the use of non-tax sources targets individuals, corporate tax professionals should not rest too easily.  Most corporate taxpayers might not be engaged in such outright noncompliance as failing to file returns.  Nevertheless, the volume of non-tax information that is available in the public domain - especially for large, public companies - poses  potentially analogous risks to corporate taxpayers  for the positions taken on their tax returns. Beyond the traditional sources of non-tax information, such as SEC filings and court documents, news articles and press releases proliferate over the Internet.  Likewise, companies may face a new potential source of trouble in the proliferation of social networking sites.  From LinkedIn resumes to Facebook profiles, information that reflects upon a company grows by the day.