Estate tax filing relief
Thursday, September 15th, 2011
The IRS has provided some estate tax filing relief for executors of the estates of those who died in 2010. Notice 2011-76 provides an automatic extension of time to file and pay the estate tax due. The rules generally apply to estates exceeding $5 million.
The estate tax was repealed for 2010 and was replaced with a complicated carryover basis calculation to determine the value of inherited assets. Congress reinstated the estate tax retroactively and let executors choose whether to be governed by the estate tax rules or opt out and use the carryover basis rules, adding another layer of complexity. As a result of the new law, guidance and forms were delayed. Updated instructions for Form 706 were posted only recently, and Form 8939 to make the election is still in draft form.
The IRS has changed the due date of Form 8939 to January 17, 2012. This is not an extension, so an additional form is not required.
For executors who timely filed an extension to file the estate tax return on Form 4768, the extended deadline is now March 19, 2012 for most decedents. For dates of death between December 16, 2010 and January 1, 2011, the extended deadline is 15 months after the date of death.
The notice also provides late-filing and late-payment penalty relief, although interest will still be charged for tax not paid by the original due date of the return.