Tax Update: Senators want Treasury to limit use of trusts by the wealthy
- May 1, 2023: Vol. 10, Number 5

Tax Update: Senators want Treasury to limit use of trusts by the wealthy


Five Democratic senators urged Treasury secretary Janet Yellen to crack down on the use of trusts by wealthy Americans to dodge paying some taxes. “Billionaires and multi-millionaires use trusts to shift wealth to their heirs tax-free, dodging federal estate and gift taxes,” sens. Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), Bernie Sanders (I-VT) and Sheldon Whitehouse (D-RI) told Yellen in a letter. The senators said the wealthy “use increasingly complex tax planning to exploit trusts and avoid paying taxes, including through using grantor retained annuity trusts (GRATs), other grantor trusts, and perpetual dynasty trusts.” Treasury, the senators said, “can and should exercise the full extent of its regulatory authority to limit this blatant abuse of our tax system.” The senators want Treasury to require GRATs to have a minimum remainder value, reissue family limited partnership regulations, and to clarify that intentionally defective grantor trusts are not entitled to stepped-up basis. (ThinkAdvisor)



Sens. Maggie Hassan (D-NH) and Todd Young (R-IN) have reintroduced a bill to restore full, up-front deductions for companies’ R&D spending rather than spreading the tax break over five years, which the 2017 tax law dictated beginning in 2022 to save costs. The proposed change would be retroactive to the end of 2021. Senate Finance chairman Ron Wyden (D-OR) said he’s heard from Oregon businesses and is looking for ways to revive full, upfront expensing of companies’ research and development costs, which expired at the end of 2021. He said he’s open to ideas and has discussed a “balanced approach,” which would mean a tax package that addresses the R&D deduction and family benefits. Disagreement on including the Child Tax Credit in a tax package extending business tax breaks derailed talks for tax legislation at the end of last year. (CQ/Roll Call)



The Internal Revenue Service has issued guidance to financial institutions for reporting required minimum distributions for 2023. The guidance, contained in Notice 2023-23, implements a change to the RMD rules made by the SECURE 2.0 Act, which delayed the required beginning date for RMDs. Under this change, individual retirement account owners who turn 72 in 2023 will not have an RMD for 2023 (because the age with reference to which the required beginning date is determined for those IRA owners is changed from 72 to 73). If an IRA owner has an RMD due for 2023, the financial institution that is the trustee, custodian, or issuer maintaining the IRA must file a 2022 Form 5498 (IRA Contribution Information) by May 31, 2023, and indicate by a check in Box 11 that an RMD is required for 2023. (NAPA)


This report was compiled by the Alternative & Direct Investment Securities Association (ADISA). Visit the ADISA website ( to stay current on all of the organization’s advocacy initiatives.


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