Recent Changes for Estate Tax Returns Announced

 Posted on November 26, 2015 in Uncategorized

A recent statute passed by Congress and signed by the President, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, contains a provision concerning estates which are required to file estate tax returns and imposes new reporting requirements. The law went into effect on July 1 and it only applies to estate tax returns due on or after July 31.

According to the new law, the estate tax return must report, separately, to the IRS, and to each individual beneficiary of the estate, the estate tax value of any property the beneficiary is to receive. These statements must be provided to the IRS and any estate beneficiaries within 30 days of the estate tax return due date. For example, if an estate has a return due on December 1, the reporting must be provided by December 31.

The responsibility for this reporting falls to the executor of the estate. Information which should be provided in the statement includes the value of each property which is being reported, as well as any other information the IRS may require because of the new law.

Beneficiaries are also affected by the new law. Any tax reporting they are required, in regard to the inherited property, must be consistent with prior reporting provided by the estate tax returns.

The purpose of the new requirements is to make sure there is consistent estate and income tax reporting in an effort to ensure government loss of revenue. If there is an underpayment of any tax paid by the estate or the beneficiary because of underreporting, the party will be subject to a 20 percent penalty.

In other changes recently announced by the IRS, the agency will no longer issue estate tax closing letters unless specifically requested. In the past, a closing letter would be issued to an estate within four to six months of the return being filed. However, for returns filed on or after June 1, a request from the executor will need to be made. Still, the IRS asks the request not be made for at least four months after the return has been filed.

Estate planning and tax questions can be complicated and confusing. Contact a qualified DuPage County estate planning attorney to answer any questions or concerns you may have regarding your estate plans.

Sources:

https://www.govtrack.us/congress/bills/114/hr3236

http://www.journalofaccountancy.com/news/2015/aug/new-estate-basis-and-reporting-law-201512845.html

https://tax.thomsonreuters.com/media-resources/news-media-resources/checkpoint-news/daily-newsstand/irs-will-only-issue-estate-tax-closing-letters-on-request/