it's my opinion that the non-filing of the gift tax return does not change the facts that she made a gift of $XXXX. however, the tax laws as to gifts are complicated. so for the best advice see a lawyer who is currently practicing.
There is technically no actual dollar penalty for filing a gift tax return late unless gift tax is due (although leave it to the IRS to try to assess something).
However, filing a return starts the running of the 3-year time period for the IRS to challenge the valuation(s) reported on the return (if you never file the statute never begins to run).
that's what you risk if the return is never filed, 20 years down the road the IRS could say the valuation was too high
