Estate Tax Uncertainty for CPAs, Clients

It seems that Democrats and Republicans can agree on at least one thing: the estate tax is a mess, and it's about to get messier.

Eight years ago, in 2001, a Republican-led Congress approved a reduction in estate tax rates, as well as an increase in the size of estates that would be hit with the tax. The current rules cap the rate at 45 percent on estates valued at more than $3.5 million, or about 5,500 estates annually.

After a "year off," the tax is set to return in 2010, with a 55 percent rate that will be applied to all estates over $1 million. More than 99 percent of estates are exempt.

That will change if the exemption level is reduced to $1 million.

According to a New York Times editorial, the bottom line is "there will be many more losers than winners under estate-tax repeal, and the losers will be among Americans who are farther down the wealth ladder."

Earlier this month, the House voted to permanently extend the estate tax, approving a measure that would lock in a top rate of 45 percent on some multimillion dollar estates. The vote was 225 to 200, with only Democrats voting for the extension. A group of 26 Democrats joined Republicans in voting against the plan.

The Wall Street Journal notes that Senate Democratic leaders have failed to push through an extension, and many doubt that it will come before the beginning of the New Year, if at all.

In the interim, people will continue to die -- leaving families and their accountants scrambling for answers.

The NYSSCPA is hosting a Breakfast Briefing on the Estate Tax Jan. 26 from 8:30-10:30 a.m. The event will also be webcast. For more information or to sign up, click here for the live event, or click here to sign up for the webcast. The event is free and CPE is not available.