FAQs on Relief for Estate and Gift Taxes

The IRS has released FAQs on COVID-19 relief for estate and gift taxes. It includes clarification on due dates for filings and payments for taxpayers.

If Form 706 and payment of estate tax normally are due on May 15, 2020, when is the return and payment due?

tax deadlineThe return and payment would be due on July 15, 2020. If the return is filed and all estate tax is paid before July 15, 2020, there will be no penalties or interest assessed.

Does this relief provide a postponement of the time to make a qualified disclaimer?

It depends. If the time to make a qualified disclaimer (i.e., a renunciation of an interest in a decedent’s estate) expires on or after April 1, 2020, and before July 15, 2020, then a taxpayer has until July 15, 2020, to make a qualified disclaimer. However, the disclaimer must be timely and valid under state law. This relief is provided through Notice 2020-23’s incorporation of the relief provided in Rev Proc 2018-58.

Does this relief postpone the time to file Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent?

Yes. The due date for Form 8971 and for furnishing Schedule A (Form 8971), Information Regarding Beneficiaries Acquiring Property from a Decedent, to beneficiaries is postponed as follows:

  • If Form 706 is timely filed or due during the 30-day period ending on April 1, 2020, then the due date for filing Form 8971 and furnishing Schedule A is postponed to July 15, 2020.
  • If the due date of Form 706 is postponed to July 15, 2020, and Form 706 is filed before June 15, 2020, then the due date for filing Form 8971 and furnishing Schedule A is postponed to July 15, 2020.
  • If the due date of Form 706 is postponed to July 15, 2020, and Form 706 is not filed before June 15, 2020, then the due date for filing Form 8971 and furnishing Schedule A is the earlier of 30 days after filing or August 14, 2020.

Is the time to file a claim for refund of gift, estate, or generation-skipping transfer tax postponed?

If the time for making a claim for refund expires on or after April 1, 2020, and before July 15, 2020, a taxpayer has until July 15, 2020 to file that refund claim.

Is there a postponement of time to make a portability (DSUE) election?

A portability election must be made on a timely filed Form 706. If Form 706 is required to be filed on or after April 1, 2020, and before July 15, 2020, then the due date for making a portability election is postponed to July 15, 2020. Additionally, estates without a filing requirement have two years from the decedent’s date of death to make a portability election under Rev Proc 2017-34. If such two-year period expires on or after April 1, 2020, and before July 15, 2020, the date by which a portability election under Rev Proc 2017-34 must be made is postponed to July 15, 2020.

Is there a postponement of time to make an allocation of GST exemption or elect in or out of automatic allocation of GST exemption?

Any GST election or allocation made with respect to a 2019 transfer on Form 709 due on or after April 1, 2020, and before July 15, 2020, is timely (and, therefore, effective on the date of the transfer) if made on a Form 709 filed on or before July 15, 2020.

Is there relief available for a late allocation of GST exemption?

No. The rules for making late allocations of GST exemption are not changed by Notice 2020-18, Notice 2020-20, or Notice 2020-23. A late allocation of GST exemption made on or after April 1, 2020, and before July 15, 2020 (that is, an allocation of GST exemption to a transfer made before 2019) is effective on the date of filing.

May a taxpayer elect to treat an allocation of GST exemption made on or before July 15, 2020 to a 2019 transfer as a late allocation?

No. Generally, an allocation of GST exemption to a 2019 transfer made on or before July 15, 2020 is considered timely and effective on the date of the transfer. A taxpayer may not elect, on a return filed on or before July 15, 2020, to treat an allocation to a 2019 transfer as a late allocation.

If, pursuant to a valid extension, Form 706 is due on or after April 1, 2020, and before July 15, 2020, has the due date for filing the return been postponed, and will interest accrue if the tax was underpaid when filing the extension?

The due date for a Form 706 due on or after April 1, 2020, and before July 15, 2020, pursuant to a valid extension, is postponed to July 15, 2020. However, because Notice 2020-23 does not postpone a payment of tax that was due before April 1, 2020, interest will continue to accrue from the date payment was due (i.e., the due date of the return without extension) until the date of payment. For instance, if Form 706 was due on November 15, 2019, and was extended to May 15, 2020, then the Form 706 can be filed timely on or before July 15, 2020. However, if the return is filed on July 15, 2020, and additional payment is required, then interest on the underpayment amount will be calculated from November 15, 2019 (including for the entire period between April 1, 2020 and July 15, 2020).

Under Code Sec. 2032(d), an estate has until one year after the due date of Form 706 (including extensions) to make an alternative valuation election under Code Sec. 2032(a). Is the time to make an alternative valuation election postponed?

If the one-year period after the due date of the Form 706 expires on or after April 1, 2020, and before July 15, 2020, then you have until July 15, 2020 to make the alternate valuation election. For instance, if the return was due (either with or without extension) on May 1, 2019, then you would have until July 15, 2020 (rather than May 1, 2020) to make an alternate valuation election. This relief is provided through Notice 2020-23’s incorporation of the relief provided in Rev Proc 2018-58.

Is the required commencement date under Code Sec. 2032(c)(7) postponed for qualified farm property?

Under Code Sec. 2032A(c)(7), a qualified heir has two years from the decedent’s death to commence a qualified use of farm property for which a special use valuation election was made under Code Sec. 2032A(a). If this two-year period expires on or after April 1, 2020, and before July 15, 2020, then the end of this two-year period is postponed to July 15, 2020. This relief is provided through Notice 2020-23’s incorporation of the relief provided in Rev Proc 2018-58.

Is the time required to make a timely reformation of a non-qualified split interest trust in accordance with Code Sec. 2055(e)(3)(C)(iii) postponed?

Yes, if the 90-day period referred to in Code Sec. 2055(e)(3)(C)(iii) expires on or after April 1, 2020, and before July 15, 2020, then the end of this 90-day period is postponed to July 15, 2020. The 90-day period is based on the due date of the estate’s Form 706 or Form 1041 (as the case may be) as postponed by Notice 2020-23 (to the extent the Notice postpones the return’s due date). This relief is provided through Notice 2020-23’s incorporation of the relief provided in Rev Proc 2018-58.

Is the three-year period under Code Sec. 2516 to qualify for a gift tax exemption for transfers between ex-spouses postponed?

Yes, if such three-year period ends on or after April 1, 2020, and before July 15, 2020, then the end of this three-year period is postponed to July 15, 2020. This relief is provided through Notice 2020-23’s incorporation of the relief provided in Rev Proc 2018-58.

Is the due date for Form 5227, Split-Interest Trust Information Return, postponed?

The due date for Form 5227, originally due April 15, 2020, is postponed to July 15, 2020. This relief is provided through Notice 2020-23’s incorporation of the relief provided in Rev Proc 2018-58.

Has the time to file a 6-month extension for Form 706 been postponed?

If the time to file a request for a 6-month extension for Form 706 expires on or after April 1, 2020, and before July 15, 2020, the extension request may be timely filed on or before July 15, 2020. However, the 6-month extension will be calculated from the original due date. For example, if Form 706 is due on May 1, 2020 and the 6-month extension request is filed on July 1, 2020, then the 6-month extension applies to the May 1, 2020 due date, extending the time to file Form 706 to November 1, 2020.

View the FAQs here.

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