Not Pressing
The GRAT loophole is unlikely to be plugged anytime soon. President Obama has included a proposal to limit the GRAT technique in each of his annual budget plans but hasn’t pressed Congress to act on it, says Kenneth Kies, a Republican tax lobbyist.
Committees in the House and Senate are working on what they call comprehensive tax overhaul bills. Neither plans to address estate or gift taxes.
Covey suggests one reason for the lack of action: Wealthy donors to politicians, both Democratic and Republican, want to keep the loophole in place.
“I’ve done a lot for Democratic contributors,” he says with a smile.
No one knows for sure how much all of these GRATs cost the U.S. government. The IRS estimates the number of gift-tax returns filed in connection with new GRATs each year; there were about 1,946 in 2009, according to the most recent publicly available data.
Taxpayers don’t have to report how much each GRAT ultimately passes to heirs.
It’s as if Covey built an invisible highway bypass that carries some of the biggest fortunes past the tax man’s tollbooth. He marvels at the billions that flow along this route.
“It boggles the mind,” he says.
Article Appeared @http://www.bloomberg.com/news/2013-12-17/accidental-tax-break-saves-wealthiest-americans-100-billion.html