The Detroit Free Press reports that IRS lawyers are defending a tax bill of more than $2 billion sent to the estate of the now deceased William Davidson, claiming that the former Pistons owner did not propertly account for massive gifs to family members and for the value of stocks put in trust for his heirs:
In a 46-page filing made public in U.S. Tax Court in Washington, D.C., on Wednesday, lawyers for the Internal Revenue Service answered the estate representatives’ arguments filed in June saying the tax bill — $2.8 billion in all — was wildly inflated and that, despite a huge IRS notice of deficiency, the estate didn’t owe anything more.
The IRS denied that Davidson reported or properly valued all gifts and transfers and asked that the relief sought by the estate — namely that the tax bill be dropped — “be denied and that respondent’s determination, as set forth in the notice of deficiency, be in all respects applied.”
It could set up one of the largest such estate tax fights in U.S. history. No one keeps statistics on the size of tax petitions, but when the Free Press first broke news of the filing two months ago, experts couldn’t think of a recent one with as much money at stake.
The estate tax bill alone — $1.9 billion — would represent more than one-tenth of the $13 billion collected through that tax nationwide in 2010, when taxes on most estates of those who died in 2009, like Davidson, were paid.
Born in Detroit, Davidson built Auburn Hills-based Guardian Industries into one of the world’s leading makers of glass, automotive and building products. He went on to own the Detroit Pistons, the WNBA’s Detroit Shock and NHL’s Tampa Bay Lightning. He died March 13, 2009, at age 86, with a net worth estimated at more than $3 billion.
According to the June filing, Davidson had trusts drawn up for his wife, their children and grandchildren worth tens of millions of dollars each. But the IRS, in a notice of deficiency delivered in May, claimed $2.8 billion of underpayments in estate taxes, gift taxes, penalties and more.