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The country’s wealthiest citizens had reason to smile last week, even as measures to reduce the taxes they pay when passing on their estates faced more roadblocks on Capitol Hill. The New York Times first reported that in the next couple of months, the government will cut the jobs of nearly half the Internal Revenue Service attorneys who audit gift and estate tax returns. “It’s an extraordinary move by the IRS,” says Earl Colson, an estate planning counsel with Arent Fox. The IRS’ estate and gift tax lawyers were already stretched thin, he says, noting that returns that could raise questions often are not subjected to audits. According to another estate planning attorney, IRS attorneys have been told that the service intends to cut back on the percentage of eligible estates being audited, which is especially puzzling as the number of estates subject to the tax is decreasing. Meanwhile, unlike attorneys coming out of other federal agencies such as the Securities and Exchange Commission, these lawyers may have a tough time finding a home in private practice. “It’s kind of a hard leap to make,” says Anne O’Brien, an estate planning partner with Arnold & Porter. Colson explains that creating plans to carry out clients’ objectives to minimize the tax bite is very different work from looking at those plans after the fact to see if they comply with the rules. And although these attorneys have technical ability, they won’t have any business, says Robert Madden, an estate planning partner with the D.C. office of Powell Goldstein.
Alexia Garamfalvi can be contacted at [email protected].

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