IRS: No More Estate Tax Closing Letters…Unless You Ask

Your Guide to State, Local, Federal, Estate + International Taxation

On the website, the IRS announced that for estate tax returns (Form 706) filed on or after June 1, 2015, estate tax closing letters will be issued only upon request by the taxpayer.

Historically, the IRS’s “Frequently Asked Questions on Estate Taxes” website has provided that personal representatives can expect a closing letter to be automatically issued within four to six months from the date that Form 706 is filed if the return is without errors or special circumstances. Closing letters for returns that are selected for examination or reviewed for statistical purposes will take longer.

During estate administration, the personal representative or executor often awaits the arrival of the estate closing letter from the IRS to do the final distribution of the estate assets to the heirs. By not automatically issuing the letter, the IRS adds another task to the already overburdened administrative list.

Per the IRS information, taxpayers should wait at least four months after filing the estate return to request a closing letter.

The IRS also clarified whether, and under what circumstances, it will issue a closing letter for estate tax returns filed before June 1, 2015. One item of note is no closing letter will be issued if the estate was below the filing threshold and the portability election was denied due to late filing.

For more information, see Frequently Asked Questions on Estate Taxes.

By Melinda Nelson, CPA