The IRS has announced that it will no longer routinely issue estate tax closing letters following the submission of an estate tax return (Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return). For returns filed on or after June 1, 2015, the IRS will only issue a closing letter if requested by the estate, the agency announced. The request should be made no sooner than four months after filing.
Returns before June 1, 2015
For estate tax returns filed before June 1, 2015, the IRS will generally continue to issue closing letters. The IRS states that if a return is selected for audit or is being reviewed for statistical purposes, it will take more time to issue a closing letter.
The IRS will not always issue a closing letter for returns filed before June 1, 2015. If the return was filed after January 1, 2015, the IRS will not issue a closing letter if the estate did not meet the filing threshold for an estate and the IRS rejects the estate’s “portability” election. The IRS may reject a portability election if the return was filed late or if the estate fails to file a complete and properly-prepared return.
The filing threshold is indexed for inflation and is set at $5,250,000 for 2013; $5,340,000 for 2014; and $5,430,000 for 2015. Portability refers to the ability of a deceased spouse’s estate to transfer the estate’s unused exclusion amount to the surviving spouse. When the surviving spouse dies, that spouse’s estate can add the unused exclusion amount to the survivor’s exclusion amount.