The estate tax, as of July 2010, is not currently in place. If individuals with large estates die, leaving their riches to their heirs, their heirs will not have to pay a dime to the IRS. This is in contrast to the previous rates, which have reached as high as 45%.
The estate tax expired at the end of 2009, and Congress has not yet reinstated it (although it is set to come back in 2011). This means that if Congress does not take action before the end of the year, individuals who inherited money in 2010 will face a much smaller tax liability this year than they would have otherwise.
A Retroactive Law?
Congress, however, is considering reinstating the estate tax retroactively. This would then reinstate the estate tax not only for those individuals who die after the bill is passed, but also for those who have died during 2010.
Several high profile individuals are calling on Congress to reinstate the estate tax – commonly referred to as the “death tax”. George Steinbrenner’s estate would have been taxed at around 45%, some analysts say.
That’s $450,000,000.00 for the IRS.
Implications for the Public
Stay aware of whether or not the estate tax stays dead in 2010. If it does, then you or someone you know may face smaller tax liabilities if – heaven forbid – a loved one dies.
This estate tax news has huge implications for individuals everywhere. Although many are hoping that the estate tax is not reinstated, many others (particularly in Congress and in government) are hoping to reinstate it and receive the additional revenue that the estate tax would provide.
We will keep you posted close to the end Congress’ final session this year, which is the deadline for a retrospective bill to be passed.
