2020 & Prior Updates

Dec 31 - IRS published proposed regulations establishing a new user fee for requesting issuance of an Estate Tax Closing Letter (IRS Letter 627). The proposed user fee is $67. Written or electronic comments must be received by March 1, 2021.

 

Dec 28- The IRS announced in a Memorandum that it will temporarily accept digital signatures on certain forms that cannot be electronically filed, including Forms 706, 706-NA, and 709. All of the forms listed can be digitally signed if postmarked from January 1, 2021 through Jun 30, 2021.

 

Dec 4 - IRS interest rates remain the same for the first quarter of 2021. See Revenue Ruling 2020-28.

 

Oct 27 - Rev. Proc. 2020-45 provides the 2021 inflation-adjusted amounts for various Internal Revenue Code provisions. The section 6601(j) dollar amount for determining the "2-percent portion" of tax deferred under a section 6166 election is $1,590,000 (item .51) and the 2021 basic exclusion amount is $11,700,000 (item .41).

Sep 15 - Our table, Calculating the 2% Portion of Deferred Tax, is updated with the projected figures for 2021. The portion of tax deferred at 2% will be $636,000.

 

Sep 11 - In IR-2020-206 the IRS announced that it will temporarily accept digital signatures on 6 more forms that cannot be electronically filed, including Forms 706, 706-NA, and 709. All of the forms listed can be digitally signed if mailed by Dec 31, 2020.

 

Sep 4 - TIGTA published a report, Sensitive Tax Records Could Not Always Be Located or Timely Provided, describing how paper tax returns and examination files cannot always be found, noting that Forms 706 and 709 cannot be filed electronically. Reference is made to IRS Document 12990, IRS Records Control Schedules (a 583-page PDF file). Item 156 provides that Forms 706 (and associated Forms 709) are retained for 75 years.

 

Sep 3 - IRS interest rates remain the same for the fourth quarter of 2020. See Revenue Ruling 2020-18.

Jun 5 - Interest rates decrease for the third quarter of 2020 beginning July 1. See Revenue Ruling 2020-13.

 

Apr 10 - Notice 2020-23 provides Covid-19 filing extensions to July 15, 2020 for Forms 706 and section 6166 installment payments otherwise due on or after April 1, 2020 and before July 15, 2020, and other extension provisions.

Mar 13 - Interest rates remain the same for the second quarter of 2020 beginning April 1. See Revenue Ruling 2020-07.

Nov 7 -  Rev. Proc. 2019-44 contains the following inflation-adjusted amounts for 2020: $11,580,000 unified credit (at item .41); $1,180,000 §2032A adjustment (at .42); $15,000 gift tax annual exclusion (at .43); and $1,570,000 as the §6601(j) 2% amount for purposes of section 6166 (at .51).

 

Oct 9 - IRS released its initial 2019 - 2020 Priority Guidance Plan.

 

Sep 30 - In PLR 201938002 a supplemental 706 return making a §2032 alternate valuation was filed wirthin one year of the original 706 filing date. IRS granted the request under §301.9100-3 because the estate had relied on a law firm's failure to advise it to make the alternate valuation request on the orignal return, and the supplemental return was filed in response to the law firm's determination that the election should have been made.

 

Sep 25 - The 2019 Instructions for Form 706 have been published.

 

Jul 16 - PLR 201928007 provides several rulings under section 6166. A revocable grantor trust held shares of a company that was composed of 6 operating units. There were several tiers of entities including a holding company. After applying the principles of Rev. Rul. 2006-34, IRS held that all of the operating units were active trades or businesses for purposes of section 6166.

 

Jul 1 - In CCA 201926023 IRS advised that, because audit adjustments resulted in a lower estate tax using date of death values, section 2032(c) required that the alternate valuation date values could no longer be used to determine the total estate tax. The alternate valuation date election remained valid, however.

 

Jun 17 - In PLR 201924009 the IRS ruled that a taxpayer who acquired his citizenship solely by reason of his residence within a United States possession, and not on account of his birth, was not a citizen for estate and gift transfer taxes (including Generation-Skipping Transfer taxes).

 

Jun 5 - CCA 201922029 advised that if a remittance that is held as a deposit is returned at the taxpayer's written request, with or without interest, and a deficiency is later assessed for that period and type of tax, the running of interest will not be suspended during the period for which the remittance was held as a deposit. References were made to section 6603 and Rev. Proc. 2005-18.

 

May 7 - News release IR-2019-89 says that, beginning May 13, 2019, only individuals with tax identification numbers – either a Social Security number (SSN) or an individual taxpayer identification number (ITIN) – may request an employer identification number. The change prohibits entities from using their own EINs to obtain additional EINs. The new requirement applies to both the paper Form SS-4, Application for Employer Identification Number (PDF), and online EIN applications.

Nov-15-2018 - Rev. Proc. 2018-57 provides certain inflation-adjusted items for 2019. The basic exclusion amount for determining the unified credit is $11,400,000. The gift tax annual exclusion remains $15,000. The section 2032A aggregated decrease for special use valuation is $1,160,000. The "2-percent portion" (for purposes of calculating interest under section 6601(j)) is $1,550,000. (The maximum amount of tax deferred at 2% is $620,000, as shown in our table Calculating the 2% Portion of Deferred Tax.)

 

Jul 17 - IRS announced in Notice 2018-61 that proposed regulations will be issued regarding the effect of section 67(g) on estates and trusts, clarifying that, inter alia, estates and non-grantor trusts may continue to deduct expenses described in section 67(e)(1), and deductions enumerated in section 67(b) and (e) continue to remain outside the definition of "miscellaneous itemized deductions. Comments are requested regarding treatment of section 642(h)(2) excess deductions on termination.

 

Jun 21 - In Gaskin v. Commissioner, TC Memo 2018-89 (income tax; Jun-20-2018), the Tax Court ruled that the amount on which the 75% fraud penalty of section 6663 is computed cannot be reduced by an amended return. Reg. section 1.6664-2(c)(2) provides that the amount shown on an amended return is not included in the "amount shown as the tax by the taxpayer on his return" for establishing the amount of the underpayment in determining the fraud penalties under section 6663.

 

Mar 9 - Rev. Proc. 2018-18 (IRB 2018-10 at page 392) modifies certain inflation-adjusted items of Rev. Proc. 2017-58, including the unified credit (.35), which is based on a basic exclusion amount of $11,180,000. Modifications to the amounts excluded under section 2032A (.36), the annual exclusion for gifts (.37), and the amount used to calculate the 2% interest amount under section 6601(j) (.45) should be announced later this year.

 

Feb 26 - In CCA 201808017 the IRS concluded that notices (Statutory Notice of Deficiency) to an estate should be sent not only to the taxpayers (i.e. the executors or personal representatives), but also to all of their representatives named on a Power of Attorney (e.g. Form 2848).

 

Feb 8 - A second quarter update to the IRS 2017-2018 Priority Guidance Plan was released, but the release date of updated inflation factor adjustments for Rev. Proc. 2017-58 is not yet indicated (Rev. Proc. 2017-58 was released Oct-19-2017). One can also review the IRS index of Priority Guidance Plans from 1999 to date.

 

Jan 10 - In a Memorandum Decision the United States District Court of Utah (Central Division) awarded attorney's fees and expert witness costs to the defendants in United States v. Mary Carol S. Johnson et al. The IRS failed to show that its legal positions were substantially justified.

 

Jan 2 - We updated our table, Calculating the 2% Portion of Deferred Tax, to reflect President Trump's signing the Tax Cuts and Jobs Act (short title) into law on December 22, 2017, as Public Law 115-97.

 

2017 Jan 9 - Notice 2017-12 provides that an IRS transcript of an estate account can be used in lieu of an estate tax closing letter to confirm that an examination of the return has been closed. Reference is made to TC Code 421. See Document 6209 at Section 8A, Master File Codes, for further transcript account code number information.

 

2016 Dec 12 - In CCA 201650017 the IRS explained that if the gross estate exceeds $5,000,000 a portability election cannot be made if the estate tax return was not timely filed. If the gross estate is less than $5,000,000 and a return was not timely filed, a portability election would be granted only if a private letter ruling is requested; simply filing a zero tax return with the portability election after the due date will not be effective.

 

2013 Oct 25 - PLR 201343004 dealing with section 6166(b)(10) and 6166(b)(8) elections was released on October 25, 2013. A narrative description discusses its more important elements. The North Carolina estate tax has been repealed for decedents dying on or after January 1, 2013.