TAX NEWS - June 2010

Federal Government Loses Billions in Estate Tax after Just One Death

Thanks to legislation pushed by President George W. Bush in 2001, Americans receiving wealthy inheritances this year won't have to pay estate taxes. The one-year lapse in the tax has already cost the U.S. Treasury billions of dollars from just one missed opportunity.
 
Texas oil pipeline tycoon Dan L. Duncan passed away on March 28, leaving behind a $9 billion fortune. But his heirs won't pay a dime in estate tax to the government. Had Duncan died in 2009, when the tax was still in effect, the inheritance would have been subject to a tax of 45%.
 
Democrats, once they took control of Congress again in 2006, vowed to close the one-year gap before 2010 arrived. But they were unable to agree on the bill's language last December. They're now considering another piece of legislation to reinstitute the tax for this year and possibly apply the estate tax retroactively.
 
The Bush-era law puts the estate tax back up to 55% beginning January 1, 2011, leading some observers to worry that potential heirs might do away with ill relatives as the end of 2010 approaches.