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Thursday, June 18, 2015

You Now Have to Ask for an Estate Tax Closing Letter

The IRS issues closing letters to estates for federal estate tax purposes, acknowledging that it has accepted the estate tax return as filed, or as adjusted pursuant to audit. This used to be an automatic process.

The IRS has now announced on its website that a closing letter will be issued only if the taxpayer requests it. To make matters worse, the IRS asks that the request not be submitted until 4 months after the return is filed – thus ruling out making the request as part of the return filing.

This makes you wonder whether the IRS no longer has the resources to do a preliminary review of every filed Form 706, as in the past. If that is the reason for this new policy, then perhaps it may be advantageous to NOT request a closing letter since that may generate a review of a filed return that might not otherwise have occurred. However, in those localities where a probate court will require a closing agreement to close an estate administration, this may not be practical or possible.

Frequently Asked Questions on Estate Taxes

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