FOX Business Correspondent Madison Alworth and Kennedy Saves the World host Kennedy talk about making money and the U.S. tax system.
Mysterious inflow of over $7 billion inheritance tax payment A report to the Treasury Department early last year sparked a search for the billionaire responsible for the irregular payments.
The huge payments were first discovered by John Rico, now associate director of policy analysis at the Yale Institute for Budget Studies. Rico told FOX Business: daily financial report Since 2019, the average daily inheritance tax payment has been shown to be $86 million, while in contrast, records as of February 28, 2023 show that the inheritance tax received was $7.075 billion. million dollars, almost 80 times the normal amount.
Rico compiled the top 10 days of inheritance tax receipts, from $907 billion on April 12, 2024, to $1.613 billion on March 8, 2010, based on data dating back to 1993. 2023 was “much bigger than any previous record.”
He also noted that “nearly all of these days are during tax season, when there is some sort of legal filing deadline, so the IRS receives many payments at once. However, on February 28, 2023, I also realized that this is not the case. As far as tax law goes, that was a big clue that something strange was going on. ”
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In February 2023, the Treasury Department and IRS received an unprecedented $7 billion inheritance tax payment. (Photo by J. David Eyck/Getty Images/Getty Images)
The strange nature of this payment prompted journalist Tim Fernholz to investigate who was responsible for it. He recently documented this in an article. sherwood articles.
He investigated various known billionaires who died within the February 2023 payment deadline. IRS collects inheritance tax Payments were made for nine months from the date of death (extendable by six months), but no one had estimated total assets to account for the payments.
Fernholz stalled until a year later when he was contacted by a financial services professional. Sources said they were familiar with large properties that were publicly undervalued and timed to pay.
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An American flag flies outside the Internal Revenue Service building on February 2, 2024 in Washington, DC. (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images/Getty Images)
Officials told Fernholz that the late billionaire was not trying to avoid the incident. huge inheritance tax bill And they did so out of gratitude for the opportunities America afforded them as immigrants. They further identified the Treasury benefactor as the late Faiz Sarofim, who amassed a net worth of more than $20 billion after immigrating to the United States from Egypt and engaging in private investments.
Fernholtz later discovered that IRS data showed the source of the payment as Texas, where he lived and worked. He could not confirm that Mr. Sarofim was a generous billionaire who paid inheritance tax, leaving open the possibility that a living billionaire made the advance payment.
FOX Business has reached out to Fayez Sarofim & Co. for comment.
Fernholz's report suggested that the late Faiz Sarofim may have been the source of the large inheritance tax payments, but he could not confirm that he was the source. (Photographer: Matthew Staver/Bloomberg via Getty Images / Getty Images)
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The Treasury Department's Internal Revenue Service is legally prohibited from disclosing information about tax payments, so the IRS cannot reveal the identity of the taxpayer who is the source of the payment.
FOX Business spoke to tax experts and wealth management experts about how unusual it is for wealthy estates to leave such large sums of money with the government. Carla Dennis, registered agent, CEO and founder of accounting firm KDA, told FOX Business that the $7 billion payment would be a 40 percent inheritance tax on amounts over $12.92. “This suggests that the total estate is probably worth more than $17.5 billion,” he said. Million.
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“In my experience, it is very rare for wealthy individuals to pass on a large portion of their wealth to the government without attempting to reduce their taxes. Most use legal means to reduce the amount of taxes owed to their heirs. Lower it,” Dennis says. “These strategies include establishing trusts, transferring funds and assets, charitable giving, and other financial planning, which can significantly reduce the taxable portion of your estate and the amount of taxes owed. can.”
“The old story about 'patriotic' people who wanted to give more money to the government and create a very inefficient national plan,” Justin Rush, a financial advisor at Nemeth Rush, told FOX Business. There are some. But for the most part, people have minimal government intervention in their wealth, especially the parts of their wealth that they have worked hard to build their businesses and accumulate what they have. I'm trying to keep it down.”
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When asked about the large payout, Mahoney Asset Management CEO Ken Mahoney told FOX Business, “That's a good thing. I wish more people would do that.” “However, the deficit will be reduced a little.” “Unfortunately, it doesn't move the needle,” he added. size of deficitwhich exceeded $1.8 trillion in the past year.
