An Estate Tax Closing Letter is a document that may be provided by the IRS after it has completed its review of a federal estate tax return that was filed for a deceased person's estate. A closing letter provides pertinent information about federal estate taxes, interest, and penalties on a decedent's estate. In order to obtain an Estate Tax Closing Letter, a request for the letter must be submitted to the IRS by the taxpayer or the taxpayer's representative.
Do I Need an Estate Tax Closing Letter?
If you are responsible for administering an estate or trust or handling the probate of an estate, you may be wondering whether you need to obtain an Estate Tax Closing Letter. When an estate tax return has been filed, you may want to confirm that the IRS has accepted the return and completed its examination of the return before you distribute the assets of the estate. An Estate Tax Closing Letter may be a useful record for this purpose.You may decide to request an Estate Tax Closing Letter due to concerns about tax liens on property owned by the deceased. If you are concerned about federal estate taxes owed by the estate and want confirmation the estate tax return was accepted before completing the next steps in estate administration, you may want to request an Estate Tax Closing Letter.Another benefit to obtaining an Estate Tax Closing letter before paying bequests is to confirm the amount of federal estate tax owed. Because an executor may want to verify that the total amount of federal tax owed by the estate has been paid before distributing assets to legal heirs or beneficiaries, an executor may want to obtain an Estate Tax Closing Letter or similar documentation. Also, when an heir or beneficiary inherits property or receives another type of distribution from an estate or trust, they may want a copy of an Estate Tax Closing Letter or similar documentation for their tax records.If the estate also has to file a state estate tax return, you may need to obtain a closing letter from the IRS to submit to the state tax authority. If so, act promptly to request a federal estate tax closing letter so you will have the documentation as soon as possible for the state filing.To determine whether you need to request an Estate Tax Closing Letter, consult a probate lawyer or tax professional. They can also advise on circumstances when an account transcript from the IRS may be sufficient in lieu of a closing letter. Find a Tax Professional.If you are acting as a fiduciary, always consult an attorney about how to perform your duties in accordance with applicable federal and state laws. If you are concerned about liability when serving as an executor or trustee, documents such as closing letters may be important to have for your records. For more on this topic, refer to our section for executors.
Who Can Get an Estate Tax Closing Letter?
Estate Tax Closing Letters are issued to the taxpayer or the taxpayer's representative. For example, the executor, personal representative or administrator of a decedent's estate may request an Estate Tax Closing Letter. The trustee of a trust or a designated power of attorney may also request an Estate Tax Closing Letter.In order to obtain an Estate Tax Closing Letter or any other information about the taxpayer or the estate tax return, the authorized representative may be required to provide documentation or other information to the IRS. For example, the representative of an estate may be required to provide a copy of Letters Testamentary, Letters of Administration, the decedent's will or other documents. Similarly, a trustee may be required to provide a
Certificate of Trust or other documentation when requesting a Closing Letter.
How to Get an Estate Tax Closing Letter
To obtain an Estate Tax Closing Letter, the taxpayer or the taxpayer's representative must specifically make a request to the IRS for the letter. If you are settling an estate or trust, the request must be made by the executor, trustee or other authorized representative. Information on where to fax your request, as well as how to make a request by telephone, is available on the IRS website. Be prepared to provide all documents, records, and other information required by the IRS in order to complete the request. For example, you may be required to provide a copy of decedent's will or trust when requesting a closing letter.If you are not comfortable submitting the request or handling the communications, consult an attorney, CPA or other tax professional about handling the request for an Estate Tax Closing Letter on your behalf.IRS instructions for requesting an Estate Tax Closing Letter provide that a request for a closing letter should not be submitted until four to six months after IRS Form 706 U.S. Estate and Generation Skipping Transfer Tax Return is filed. For more on estate tax returns, refer to our overview of tax returns due for a decedent.
Time Required to Get Estate Tax Closing Letter
If you want to request an Estate Tax Closing Letter before closing an estate or trust, it is important to understand it takes awhile to receive this document from the IRS. When communicating with heirs, beneficiaries, and other parties about the estate or trust, keep in mind the amount of time it may take to obtain documents such as a closing letter.The IRS instructions for requesting an Estate Tax Closing Letter specify that a request for a closing letter should not be made until four to six months after the estate tax return was filed. Government agency procedures change from time to time, so refer to the IRS website and consult a tax professional for the most current information on obtaining a closing letter.If you cannot wait the required amount of time to receive an Estate Tax Closing Letter, talk with a tax professional or attorney about the possibility of using an Account Transcript.
Account Transcripts and Estate Tax Returns
In some circumstances, an account transcript may be used instead of an Estate Tax Closing Letter. An account transcript from the IRS may provide information on whether the IRS has accepted Form 706 and whether examination of the estate tax return is complete. Ask your CPA or accountant about using an account transcript in lieu of a closing letter, especially if a state estate tax return is required and you need documentation on the federal estate tax return for the state filing.
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Published by Pennyborn.com on April 2, 2019. Updated on April 5, 2019.
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