The Internal Revenue Service is looking at land-transfer records state-by-state for evidence of people neglecting to report within-family real-estate gifts.

This year, large family land gifts were popular because of a new tax rule that established $5 million as the amount someone can give in a lifetime before having to pay a gift tax. However, any property worth more than $13,000, gifted to one person, is still supposed to be reported to the IRS. To be precise, Form 709 reports U.S. gifts and generation-skipping transfer taxes.

The Wall Street Journal reported the IRS effort to find land gift data after examining a court document that the IRS filed in California in an attempt to gain access to information in that state. According to the document, the states that have given the IRS information on gift-like transactions include Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin.

According to that same document, the noncompliance rates in several of those states were as follows:

• Wisconsin: 50 percent
  
• Connecticut and Nebraska: 60 percent
  
• Washington: 80 percent
  
• Florida and Virginia: 90 percent
  
• Ohio: 100 percent

IRS Scrutinizes Gifts of Real Estate [Wall Street Journal]