IRS Procedure for Requesting Extension for Late 706

From the AICPA:

Beginning in January 1, 2011, the Internal Revenue Code provides for portability of the estate tax exemption between spouses.  According to issued guidance so far from the IRS (Notice 2011-82 and IR-2011-97), to claim the benefit of portability, a timely filed Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return, is required.  If the estate tax return is not timely filed, the guidance provides that the surviving spouse will not be able to claim the benefit of portability.

There is a procedure under section Treas. Reg. § 20.6081-1(c) that permits an estate, upon showing good cause, to seek a 6-month extension of time to file the estate tax return.  Under this procedure, an estate is to file Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes.  Form 4768 must contain a detailed explanation of why it is impossible or impractical to file a reasonably complete estate tax return by the due date and an explanation showing good cause for not requesting the automatic extension of time to file the return.  Section 20.6081-1(c) provides that Form 4768 should be filed sufficiently early to permit the IRS time to consider the matter and reply before what otherwise would be the due date of the return.  The instructions to Form 4768 provide that if the estate has not filed an application for an automatic extension and the time for filing such application has passed, the estate should file Form 4768 as soon as possible.  It may be worth considering requesting a 6-month extension of time to file the estate tax return if you missed filing the return in time and would like to try to obtain the benefit of portability for the surviving spouse.

Blogger’s note:  Unless Congress extends the availability of portability and use of the additional exemption gained, it will expire at the end of this year, along with the increased $5.12 million exemption (reverts to $1 million).  We’ll see what happens after the election!