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IRS Extends Due Date for 2010 Estate Tax Exemption
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Written by James D. Crawford   
Thursday, 22 December 2011
Providing some relief to stressed-out estate planning attorneys and tax practitioners, the Internal Revenue Service announced Sept. 13 that estates of 2010 decedents will have a longer time to file forms to exempt out of the estate tax and may be able to receive a filing extension.

In August, the IRS issued a Notice and Revenue Procedure for 2010 estates seeking to exempt out of the tax.

Executors can choose to exempt an estate by filing Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent, applying the new carryover basis rules instead.

But Form 8939 – set to be released this month – had an original filing deadline of Nov. 15, 2011, with no extensions allowed, worrying practitioners about complying with the two-month window.

Recognizing the need for more time, the IRS announced that executors will now have until Jan. 17, 2012 to file an exemption.

“Because this is a change in the specified due date rather than an extension, no statement or form needs to be filed with the IRS to have this new due date apply,” the agency said in a release.

The agency also announced two other forms of related relief.

While the original Notice provided that no extensions would be allowed for filing Form 8939, the IRS announced that estates may seek an extension using Form 4768. While a six-month filing extension is usually automatically granted, the agency said extensions of time will be granted only for good cause and that most estates will have until March 19, 2012 to file their estate tax return sand pay any estate tax that is due.

While no late-filing or late-payment penalties will be due, the IRS said that interest will be charged on any estate tax paid after the original due date.

In addition, the agency said that special penalty relief may be provided to estates that already filed a 2010 federal income tax return. In those cases, late payment and negligence penalty relief may apply where an individual who inherited property from a 2010 decedent sold the property in the same year but improperly reported gain or loss because they did not know whether the estate made the carryover basis election.
Last Updated ( Thursday, 22 December 2011 )