Lottery Case Shows IRS Stays Hot on Trail of Unpaid Gift Tax Years Later

For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...

A U.S. Tax Court case involving lottery winnings shows that IRS is on the hunt for unpaid gift taxes, Bruce Steiner, attorney with Kleinberg, Kaplin, Wolff and Cohen, tells Bloomberg BNA. “In addition to auditing gift tax returns that are filed, the government audits returns that weren't filed,” he said, referring to a court case in which Tonda Lynn Dickerson, a waitress from Grand Bay, Ala., formed a corporation to share her winnings with family members after she won a lottery jackpot. IRS went back more than eight years to claim gift taxes on the 1999 lottery winnings, Steiner says, an indication of the agency's watchfulness and reach.