Tuesday, September 13, 2011

2010 Decedent Estates Granted Federal Filing & Payment Relief

The IRS has relented on next week's (September 19th) earliest filing and payment deadlines for some 2010 estates, otherwise anticipated by Section 301(d) of the Tax Relief Act and enforced by the IRS' prior Notice 2011-66, released on August 5, 2011.

That Act states that for decedents who died after December 31, 2009, and before December 17, 2010, the time for filing the estate tax return and the payment of estate tax “shall not be earlier than the date which is 9 months after the date of the enactment of this Act.” Thus, the earliest due date could be September 19, 2011, depending upon the date of death.

The new taxpayer (and tax preparer) relief is described in a September 13, 2011 Press Release, which appeared online today on the IRS Newsroom:
IRS Offers Filing and Penalty Relief for 2010 Estates; Basis Form Now Due Jan. 17; Extension to March Available for Estate Tax Returns
IR-2011-91, Sept. 13, 2011 — The IRS announced that large estates of people who died in 2010 will have until early next year to file various returns and pay any estate taxes due.
This is the brief, complete text of that Press Release, with links:
The Internal Revenue Service announced today that large estates of people who died in 2010 will have until early next year to file various required returns and pay any estate taxes due. In addition, the IRS is providing penalty relief to certain beneficiaries of these estates on their 2010 federal income tax returns.

This relief is designed to give large estates, normally those over $5 million, more time to comply with key tax law changes enacted late last year. Revised versions of the estate tax forms are now available on IRS.gov, and the carryover basis form will be released this fall.

The IRS is providing the following relief:
  • Large estates, opting out of the estate tax, now will have until Tuesday, Jan. 17, 2012, to file Form 8939. This special carryover basis form, required of estates making this choice, was previously due on Nov. 15, 2011. 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.
  • 2010 estates that request an extension on Form 4768 will have until March 2012 to file their estate tax returns and pay any estate tax due. Normally, a six-month filing extension is automatically granted to estates filing this form, but extensions of time to pay are granted only for good cause. As a result, most 2010 estates that timely file Form 4768 will have until Monday, March 19, 2012 to file Form 706 or Form 706-NA. For estates of those dying late in 2010 (after Dec. 16, 2010 and before Jan. 1, 2011), the due date is 15 months after the date of death. No late-filing or late-payment penalties will be due, though interest still will be charged on any estate tax paid after the original due date.
  • Special penalty relief is provided to many individuals, estates and trusts that already filed a 2010 federal income tax return, or obtained an extension and plan to file by the Oct. 17, 2011 extended due date. Late-payment and negligence penalty relief applies to persons inheriting property from a decedent dying in 2010, who then sells the property in 2010 but improperly reports gain or loss because they did not know whether the estate made the carryover basis election. Details are in Notice 2011-76, posted today on IRS.gov.